Japan is approaching an end to deflation, the government said on Thursday, offering its most upbeat view on prices in nearly four years as a steady pick-up in the economy allows more companies to pass on rising costs to consumers.
The government also revised up its assessment on the job market to say it is "improving," as falls in the yen triggered by Prime Minister Shinzo Abe's reflationary policies boost manufacturers' profits and push down the jobless rate to levels before the collapse of Lehman Brothers.
"Recent price developments indicate that deflation is ending," the government said in a monthly economic report for August, offering a brighter view than last month when it said deflationary pressures were easing.
But it is too early to declare that Japan has made a sustained exit from deflation, according to an official who briefed journalists on the report, noting that doing so would require more lasting rises in consumer prices.
Japanese consumer prices rose in June for the first time in more than a year, although most of the increase was due to higher electricity bills rather than stronger demand that could drive a durable recovery.
The government has described the economy as in deflation since November 2009. Removing the word "deflation" from the report, or declaring that deflation is over, would herald a major success in its battle with price declines.
Source : NewsOnJapan
