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Japan Inflation

Japan Inflation

Inflation in Japan

Japan generally experienced low inflation from 2013 to 2022, often below 1% and even slipping into negative territory, despite the Bank of Japan's aggressive monetary easing policies. This trend was attributed to a combination of factors, including an aging population, stagnant wage growth, and a culture of price sensitivity among consumers. However, the aftermath of the COVID-19 pandemic has seen inflation rise to multi-decade highs, raising hopes that Japan may be breaking free of its past trend of persistently low price pressures.

Consumer price inflation in Japan averaged 0.8% in the ten years to 2022, below the Major Economies regional average of 2.1%. The 2022 average figure was 2.5%. For more inflation information, visit our dedicated page.

Japan Inflation Chart

Note: This chart displays Inflation Rate (CPI, annual variation in %) for Japan from 2014 to 2023.
Source: Japanese Bureau of Statistics.

Japan Inflation Data

2018 2019 2020 2021 2022
Inflation (CPI, ann. var. %, aop) 1.0 0.5 0.0 -0.2 2.5
Inflation (CPI, ann. var. %, eop) 0.3 0.8 -1.2 0.8 4.0
Inflation (Core, ann. var. %, eop) 0.8 0.8 -1.1 0.6 4.0
Inflation (Core, ann. var. %, aop) 0.9 0.6 -0.2 -0.2 2.3
Inflation (PPI, ann. var. %, aop) 2.6 0.2 -1.2 4.6 9.8

Inflation above target for 24th month running in March

Inflation came in at 2.7% in March, down from February’s 2.8% but marking two years of readings above the 2.0% target of the Bank of Japan (BOJ). The slowdown largely reflected lower price pressures for transport, clothing, furniture and household utensils, healthcare, communication, and culture and recreation. The trend was unchanged, with annual average inflation coming in at February's 3.0% in March. Meanwhile, core inflation—which excludes food prices—fell to 2.6% in March from the previous month's 2.8%, coming in slightly below market expectations. Finally, consumer prices increased 0.30% in March over the previous month, contrasting February's 0.03% drop. March's uptick marked the highest reading since October 2023.

Average inflation should fall below the BOJ’s 2.0% target in Q4 2024 as agricultural prices decline, coming in only slightly above target in 2024 as a whole. That said, price pressures are likely to spike in summer as a result of the government’s recent decision to phase out utility subsidies from May. Upward pressure on inflation will be exacerbated by this year’s wage negotiations between unions and large firms, which concluded in March and will lead to the highest salary hike since the early 1990s, ending years of anemic wage growth.

Min Joo Kang, senior economist at ING, commented on the monetary policy outlook: “Given that higher commodity prices combined with a weak yen are likely to push up both headline and core inflation, the BoJ’s need to raise rates sooner than market consensus is likely to increase in our view. Recent hawkish comments from Governor Ueda also signal a change in tone in the BoJ's response to the currency move. He said that if the impact of the weak yen becomes too big to ignore, it might lead to a change in monetary policy. […] We have penciled in a 15bp hike in July and a 25bp hike in October.”

Consensus Forecasts and Projections for the next ten years

How should you choose a forecaster if some are too optimistic while others are too pessimistic? FocusEconomics collects Japanese inflation projections for the next ten years from a panel of 51 analysts at the leading national, regional and global forecast institutions. These projections are then validated by our in-house team of economists and data analysts and averaged to provide one Consensus Forecast you can rely on for each indicator. By averaging all forecasts, upside and downside forecasting errors tend to cancel each other out, leading to the most reliable inflation forecast available for Japanese inflation.

Download one of our sample reports to visualize what a Consensus Forecast is and see our Japanese inflation projections.

Want to get access to the full dataset of Japanese inflation forecasts? Send an email to info@focus-economics.com.

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