Breaking News
Get 40% Off 0
🔎 See NVDA's full ProTips for an instant risks or rewards Claim 40% OFF

Japan's govt sees inflation sharply exceeding BOJ target

Published Jul 20, 2023 02:06AM ET Updated Jul 21, 2023 04:10AM ET
Saved. See Saved Items.
This article has already been saved in your Saved Items
© Reuters. FILE PHOTO: A Japanese flag flutters on the Bank of Japan building in Tokyo, Japan, March 15, 2016. REUTERS/Toru Hanai/File Photo
Add to/Remove from Watchlist
Add to Watchlist
Add Position

Position added successfully to:

Please name your holdings portfolio

(This July 20 story has been corrected to change the attribution to senior Japan economist at UBS Securities, not economist at JPMorgan Chase (NYSE:JPM) in paragraph 5)

By Leika Kihara

TOKYO (Reuters) - Japan's government on Thursday forecast inflation sharply exceeding the central bank's 2% target this year, acknowledging broadening price rises that may keep alive market expectations of an end to ultra-low interest rates.

The estimates come ahead of closely watched Bank of Japan policy meeting next week, when the board will revise its quarterly forecasts and debate progress on sustainably meeting its price target.

In its mid-year review, the government expects overall consumer inflation to hit 2.6% for the fiscal year that began in April, up sharply from 1.7% projected in January. Inflation last year was 3.2%.

The government projects inflation to slow next fiscal year but, at 1.9%, stay close to the central bank's target.

"The government's inflation forecasts are well in line with market forecasts. It wouldn't surprise me if the BOJ revises up its price projections this month," said Masamichi Adachi, senior Japan economist at UBS Securities.

Underscoring the fragile nature of Japan's recovery, the government slashed its economic growth forecast for this fiscal year. It expects the economy to expand 1.3% this fiscal year, below the 1.5% estimated in January, due to a hit to exports from slowing global demand.

"Japan's economy is recovering moderately" with positive signs emerging, such as steady wage hikes and strong corporate spending appetite, Prime Minister Fumio Kishida said.

"It's important to ensure Japan makes steady progress in exiting deflation, and shift to a society where wage hikes become a norm," he told the government's top economic council.

After more than two decades of deflation and stagnant wage growth, Japan has seen inflation exceed the central bank's 2% target for more than a year as firms continued to pass on rising raw material costs to households via price hikes.

Companies offered pay raises unseen in three decades at this year's wage negotiations with unions, heightening market expectations of a tweak to the BOJ's yield curve control (YCC) policy, which caps long-term interest rates around zero.

BOJ Governor Kazuo Ueda has brushed aside the chance of a near-term exit from ultra-loose policy, arguing that the recent cost-driven rise in inflation must be replaced by price gains driven more by robust domestic demand and higher wage growth.

But an upgrade to its inflation forecasts will likely keep alive market expectations that Ueda will soon start to phase out his predecessor's massive stimulus programme.

In its April forecasts, the central bank predicted core consumer inflation - which strips away the effect of fresh food costs - to hit 1.8% this fiscal year and 2.0% the following year.

Japan's govt sees inflation sharply exceeding BOJ target

Related Articles

Add a Comment

Comment Guidelines

We encourage you to use comments to engage with other users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind:  

  •            Enrich the conversation, don’t trash it.

  •           Stay focused and on track. Only post material that’s relevant to the topic being discussed. 

  •           Be respectful. Even negative opinions can be framed positively and diplomatically. Avoid profanity, slander or personal attacks directed at an author or another user. Racism, sexism and other forms of discrimination will not be tolerated.

  • Use standard writing style. Include punctuation and upper and lower cases. Comments that are written in all caps and contain excessive use of symbols will be removed.
  • NOTE: Spam and/or promotional messages and comments containing links will be removed. Phone numbers, email addresses, links to personal or business websites, Skype/Telegram/WhatsApp etc. addresses (including links to groups) will also be removed; self-promotional material or business-related solicitations or PR (ie, contact me for signals/advice etc.), and/or any other comment that contains personal contact specifcs or advertising will be removed as well. In addition, any of the above-mentioned violations may result in suspension of your account.
  • Doxxing. We do not allow any sharing of private or personal contact or other information about any individual or organization. This will result in immediate suspension of the commentor and his or her account.
  • Don’t monopolize the conversation. We appreciate passion and conviction, but we also strongly believe in giving everyone a chance to air their point of view. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
  • Only English comments will be allowed.
  • Any comment you publish, together with your profile, will be public on and may be indexed and available through third party search engines, such as Google.

Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at’s discretion.

Write your thoughts here
Are you sure you want to delete this chart?
Post also to:
Replace the attached chart with a new chart ?
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Thanks for your comment. Please note that all comments are pending until approved by our moderators. It may therefore take some time before it appears on our website.
Are you sure you want to delete this chart?
Replace the attached chart with a new chart ?
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Add Chart to Comment
Confirm Block

Are you sure you want to block %USER_NAME%?

By doing so, you and %USER_NAME% will not be able to see any of each other's's posts.

%USER_NAME% was successfully added to your Block List

Since you’ve just unblocked this person, you must wait 48 hours before renewing the block.

Report this comment

I feel that this comment is:

Comment flagged

Thank You!

Your report has been sent to our moderators for review
Continue with Google
Sign up with Email