Amid recent strong wage growth and broadening price hikes, Japan stands a better chance of finally breaking with the deflation that has "shackled" the nation for a quarter of a century, the government said Tuesday in its annual economic and fiscal policy report.
The government has yet to formally declare an end to deflation because current rising prices are largely due to higher import costs and there is still uncertainty over the sustainability of wage growth, a key factor in determining whether deflation is a thing of the past.
But while such cost-push factors, rather than strong consumer appetite, may have been driving up inflation in recent months and increasing the burden on households, they are also changing people's price expectations, according to the white paper presented to a Cabinet meeting on Tuesday.