Japan’s Cabinet Office: The end of deflation is in sight

January 26, 2007
By Ken Worsley

In a report issued on Thursday in Tokyo, Japan’s Cabinet Office had this to say:

The economic recovery will be driven by the private sector. Solid corporate profits will spread to households through improvement in the job market and wages…The end of deflation is in sight…but we need to monitor risks to ensure prices don’t resume falling.

Japan’s core consumer prices (which exclude fresh food) rose 0.2% in November (versus the previous year) and are projected to see the same growth in the December statistics, when they are released later today.

Many observers are expecting a slowdown in exports due to sluggish global demand over the coming year, which is expected to cut into corporate profits, and thus capital expenditure, which has fueled Japan’s recent economic growth. The Cabinet Office did not explain how consumer spending would be expected to pick up if such an economic environment becomes reality.

The Cabinet Office believes that Japan’s economy will grow at a 2% rate for the financial year beginning this coming April 1st.

Filed Under Cabinet Office, Consumer Spending