Japan minister urges caution on declaring end to deflation

Japan's Economic and Fiscal Policy Minister Minoru Kiuchi cautioned on Friday against prematurely declaring an end to deflation, as the Bank of Japan prepares to evaluate whether it has reached its 2 percent inflation target. At a press conference, Kiuchi emphasized the importance of exercising caution in such a declaration, as the government aims to ensure Japan does not revert to deflation.

The government insists on confirming that the country will not fall back into deflation before making such a decision. The Bank of Japan is anticipated to determine at its two-day policy meeting starting Thursday whether underlying inflation has reached the 2 percent mark, a goal set in January 2013. Core consumer prices, excluding volatile fresh food, have increased by more than 2 percent annually for four consecutive years since 2022, leading some market observers to contend that the target has already been met.

The central bank has underscored the necessity to assess whether inflation persists after accounting for temporary factors and whether wages are rising consistently. In January 2013, the government and the Bank of Japan issued a joint statement committing to monetary easing to achieve the 2 percent target. When asked if the statement would be revised if the government declared an end to deflation, Kiuchi refrained from commenting, stating the inquiry was hypothetical.