Inflation in Japan might be tougher to tame than expected, putting real wage growth at risk and possibly becoming a drag on much-needed household consumption.
“Although the Bank of Japan forecasts a slowdown in food price growth and overall inflation from the second half of 2025, it's important to keep in mind that this may not actually happen,” said Saisuke Sakai, chief economist at Mizuho Research & Technologies.
Japan struggled with deflation for decades and kept rates at or near zero for years to get prices rising again. They are now increasing and are becoming an issue for workers, who are finding their wages barely growing or actually declining month to month on a real basis.
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