Japan business lobby chief hopes for gov’t efforts to end deflation

by Mar 18, 2024Featured Article, News

The head of Japan’s biggest business lobby on Sunday expressed hope that the government of Prime Minister Fumio Kishida will take necessary measures to fully combat the country’s decades-long deflation.

In a speech at the annual convention of Kishida’s ruling Liberal Democratic Party, Masakazu Tokura, chairman of the Japan Business Federation known as Keidanren, said the nation’s economy has been on an upward trend on the back of robust wage growth.

“It is important for the country to work as one to make this year a historic turning point in completely overcoming deflation that has continued for 30 years,” Tokura said, pledging to cooperate with the government and the LDP to shore up the business sector.

His remarks came days after the Japanese Trade Union Confederation said in a preliminary survey that domestic companies agreed to wage increases averaging 5.28 percent at this year’s negotiations with labor unions, marking the sharpest rise in more than 30 years.

Earlier this month, Kishida’s government began considering whether to declare an official end to deflation, or continuously falling prices, given the recent expansion of profits at Japanese companies, sources familiar with the matter said.

In 2023, Japan’s core consumer prices, excluding volatile fresh food items, surged 3.1 percent, registering the fastest increase in 41 years.

The Bank of Japan, meanwhile, is expected to end negative interest rates at its two-day monetary policy meeting through Tuesday, sources close to the matter said, in what would be the first hike in 17 years and a departure from years of unorthodox easing.