Tokyo, Oct. 31 (Jiji Press)–The Japanese government is expected to continue cautiously considering whether to declare that the country has fully emerged from deflation, despite the Bank of Japan’s announcement Friday that underlying inflation has reached its 2 pct target. Opposition parties have called on the government to adopt a clearer stance on tackling inflation. Democratic Party for the People leader Yuichiro Tamaki said that it should “promptly” declare that Japan has come out of deflation. “The economy must not only have emerged from a situation of sustained price drops but also be in a condition where we can determine that there is no prospect of returning to such a situation,” Chief Cabinet Secretary Minoru Kihara said when asked about a possible declaration at a press conference Friday, reiterating the government’s long-held view. “Our position that the matter needs to be judged carefully remains unchanged.” Prime Minister Sanae Takaichi said in July that the government was “not in a position to say the deflation had been ended.” Some officials close to the prime minister have questioned the value of such a declaration, saying it “would have little meaning.” The government is instead focusing on measures to tackle rising prices stemming from the Middle East turmoil and other factors. A government source explained that Takaichi’s signature “responsible and proactive” fiscal policy is designed to boost supply capacity rather than stimulate demand and would therefore help curb inflation. Meanwhile, there are persistent views that the Takaichi administration’s commitment to maintaining monetary easing and proactive fiscal policy stems from the efforts of prime ministers since the late Shinzo Abe to end deflation. The second Abe administration, which ran from 2012 to 2020, and the BOJ issued a joint statement in 2013 pledging to work together to achieve the inflation target of 2 pct. Kihara said that economic conditions and prices have changed significantly since the joint statement was issued. But he declined to give a clear answer when asked whether it would be revised. The DPFP’s Tamaki told his party’s lawmakers Friday that “it makes no sense that the government cannot declare an end to deflation while taking measures to combat rising prices.” “We are finally in an era of inflation,” Komeito Secretary-General Makoto Nishida told a press conference. “We need to thoroughly review the tax system and other policies.” “Did we want cost-push inflation and inflation caused by the yen’s depreciation?” Junya Ogawa, leader of the Democratic Reform Party, said, criticizing the government. END [Copyright The Jiji Press, Ltd.]
