TOKYO, March 2 (Xinhua) -- The Japanese government is weighing the possibility of declaring an end to deflation, marking a potential shift after nearly two decades of battling moderate price declines, local media reported on Saturday.
Recent inflation and the prospect of sustained wage growth offered hope for a departure from deflation. While Japanese officials may publicly announce this change, uncertainties linger regarding economic conditions, including a recent technical recession.
The government will carefully examine the outcome of labor-management wage negotiations this spring and the outlook for inflation in determining whether conditions have fallen into place for Japan to declare a complete break with deflation, national news agency Kyodo reported, citing sources.
Prime Minister Fumio Kishida and cabinet members may publicly declare this change, possibly in the government's monthly economic report, the report noted.
Japan's economy has long been caught in a cycle where falling prices suppress corporate profits and hinder wage growth, leading to stagnation in private consumption.
Efforts to combat deflation have been ongoing for years, with the Bank of Japan's measures, including aiming for 2 percent inflation, shaping the potential milestone. However, caution prevails due to lingering doubts about the price outlook and broader economic stability.
According to Kyodo, some officials view an official end to deflation as more of a formality given Japan's official stance that it is not currently in a deflationary state, with many others recognizing the risk of economic conditions worsening after an announcement. ■
