Japanese companies only pass on increased purchasing costs to their customers to a very limited extent – because they react sensitively.
(Photo: Reuters)
Tokyo In the USA, Europe and many Asian countries, central banks are considering whether to fight rising inflation with interest rate hikes. The Bank of Japan, however, is still facing the opposite problem: not even the massive Corona aid programs and rising commodity prices can free Japan from the deflationary environment that has been in place for more than 20 years.
While the US consumer price index rose 6.8 percent in November, a 40-year high, prices in Japan only rose 0.1 percent. The economists at the investment bank Nomura are predicting an inflation peak of 1.5 percent for the summer of 2022, because the higher raw material prices are also having an impact in Japan.
But the market consensus for the coming year is an inflation rate of only 0.7 percent – and thus still well below the central bank’s two percent inflation target.
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