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

Shuichiro Ikeda, Haruhiko Inatsugu, Yui Kishaba, Takuji Kondo, Kenichi Sakura, Kosuke Takatomi, Takashi Nakazawa and Kotone Yamada
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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

No 22-E-18, Bank of Japan Working Paper Series from 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.

Keywords: Phillips curve; Cost push; Price rigidity; Inflation expectations; Wages (search for similar items in EconPapers)
JEL-codes: E30 E31 J30 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-ban, nep-lma and nep-mon
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