Inflation is rising in Japan, but there are still issues impacting Japanese companies' profitability, explains Genzo Kimura, economist at Sumitomo Mitsui Trust Bank.
In its outlook report published last month, the Bank of Japan estimated an inflation outlook of +1.9% in 2015, rising to +2.1% in 2016. However, many argue the inflation witnessed in recent months has been mainly brought about by a weaker Japanese yen, and a slowdown in this momentum could ease the current inflationary pressure. While the inflation hike was initially triggered by the BoJ’s monetary expansion, which made the yen weaker, inflation is currently being driven not only by the currency, but also by the recent hike in wages, which have increased by an average of 2% since the ...
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