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Inflation in Japan: Changes during the Pandemic and Issues for the Future

Author

Listed:
  • Shuichiro Ikeda

    (Bank of Japan)

  • Haruhiko Inatsugu

    (Bank of Japan)

  • Yui Kishaba

    (Bank of Japan)

  • Takuji Kondo

    (Bank of Japan)

  • Kenichi Sakura

    (Bank of Japan)

  • Kosuke Takatomi

    (Bank of Japan)

  • Takashi Nakazawa

    (Bank of Japan)

  • Kotone Yamada

    (Bank of Japan)

Abstract

As the impact of COVID-19 pandemic eased and economic activity resumed, prices have risen sharply in the U.S. and Europe, partly due to the impact of rising commodity prices. Although not to the same extent as the U.S. and Europe, in Japan inflation rates have also been rising, especially for goods prices. In order to further develop the discussion on the nature of these recent price developments in Japan and their outlook, this paper (1) summarizes the characteristics of inflation dynamics in Japan before the spread of COVID-19, mainly using the framework of the Phillips curve, (2) confirms the recent changes and characteristics of price developments, and (3) summarizes the issues for the future. Based on the fact-finding of this paper, we conclude it is important to accumulate analyses on the stickiness of service prices, nominal wage rigidity, and uncertainty in inflation expectations, which are characteristic of Japan, in order to further deepen the discussion on these recent price developments.

Suggested Citation

  • Shuichiro Ikeda & Haruhiko Inatsugu & Yui Kishaba & Takuji Kondo & Kenichi Sakura & Kosuke Takatomi & Takashi Nakazawa & Kotone Yamada, "undated". "Inflation in Japan: Changes during the Pandemic and Issues for the Future," Bank of Japan Working Paper Series 22-E-18, Bank of Japan.
    • Handle: RePEc:boj:bojwps:wp22e18
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    References listed on IDEAS

    as
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    More about this item

    Keywords

    Phillips curve; Cost push; Price rigidity; Inflation expectations; Wages;
    All these keywords.

    JEL classification:

    • E30 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - General (includes Measurement and Data)
    • E31 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Price Level; Inflation; Deflation
    • J30 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - General

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