Japan is approaching an end to deflation after almost four years, the government said on Thursday. This might allow companies to pass on rising costs to consumers. Also, the job market might be improving, due to the fall of the yen that resulted from Prime Minister Shinzo Abe’s deflationary policies.
“Recent price developments indicate that deflation is ending”, the government said in a monthly economic report for August, quoted by the media.
Japanese consumer prices rose in June for the first time in more than a year, although most of the increase was represented by higher electricity bills rather than stronger demand that could drive a durable recovery.
The government has described the economy as in deflation since November 2009. The government kept intact its assessment on the overall economy, saying it is “picking up steadily and showing some moves toward a sustained recovery”.
Japan’s economy grew an annualised 2.6 percent in April-June to mark the third straight quarter of expansion as a pick-up in exports added to sustained strength in personal consumption.