Editorial BOJ and inflation: Ideas Later.

Editorial: Japan's 2% inflation calls expansionary fiscal policy into question

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Article:

The Bank of Japan (BOJ) has announced that the nation's underlying inflation rate, which excludes temporary fluctuations, has reached its 2% target. It took 13 years to achieve the target after it was set in 2013. This can be seen as a milestone marking the Japanese economy's shift into an inflationary phase after a prolonged struggle with deflation.

The target was set at the urging of then Prime Minister Shinzo Abe's second administration, which pledged an early exit from deflation. The BOJ pursued unprecedented monetary easing centered on massive purchases of government bonds and a negative interest rate policy, but for years it remained unable to reach the target.

Still, many people may find the declaration of an achievement at this moment bewildering. Russia's invasion of Ukraine in 2022 triggered a surge in resource prices, and soaring prices have continued to squeeze household budgets.

It was not until the spring of 2024 that the BOJ ended its unprecedented easing. Its pace of interest rate hikes after that was also gradual. That was because the central bank was wary of cooling the economy too much and sending it back into deflation.

However, since this summer, global inflationary pressures have intensified as crude oil prices have remained high due to turmoil in the Middle East. Depreciation of the yen has compounded the problem, and price increases in Japan have become pronounced as well. The challenge now is whether inflation can be kept stable at around 2%. To that end, the BOJ needs to continue raising interest rates to curb price increases.

As Japan looks ahead to a sustainable recovery of its economy, the Japanese government's response will also be tested. Prime Minister Sanae Takaichi's administration, after being criticized by U.S. President Donald Trump over the weak yen, has been less inclined to intervene in the BOJ's monetary policy. But restraint alone is not enough.

The administration must reconsider its expansionary fiscal policy as a whole, including consumption tax cuts and gasoline subsidies. Even though the economy has shifted from deflation to inflation, clinging to measures to stimulate demand as if Japan were still in the deflationary era will only fuel higher prices. Such measures could cancel out the effect of the BOJ's rate hikes, undermining efforts both to curb inflation and to reverse the yen's depreciation.

Now that the 2% inflation target has been reached, the proper course would be for the government to declare an exit from deflation. The Takaichi administration has presumably refrained from doing so because it fears that such a declaration would weaken the rationale for the expansionary fiscal policy that it has made a centerpiece of its agenda.

But unless the government and the BOJ move in step, they will not be able to break the cycle of inflation and depreciation of the yen that is burdening the public. They should align their understanding of prices and pursue an appropriate combination of fiscal and monetary policies.

Article source:   https://mainichi.jp/english/articles/20261102/p2a/00m/0op/016000c

BOJ and Price Stability: Updated Nov. 2, 2026.

After decades of deflation, BOJ faces test of maintaining price stability

Ideas

The Bank of Japan is correct to say that its the beginning of a new phase and even though the BOJ might have reacched its 2 percent target, there, as again noted in another article there are still pockets of deflaton and even pockets of inflation in some areas in Japan the BOJ has to deal with both at the same time.

But the BOJ is again correct in saying that the deflation situation might be worse than inflation as there are a host of challenges with deflation such as less spending in the economy as consumer look for even lower prices, less investment spending by companies as they wait for the economy to improve, and lower wages are offered by companies which affect the debt household have and many other negatives.

Yes, its possible as Japan's population continues to decline and consumer spending doesn't seem to be picking up either the BOJ is maybe resigned to suggest global inflation might be the lesser of evils to help the economy get out if stagnant and deflation stage.

But there is always the idea of foreign tourist consumer spending, which has been at record numbers recently, to help pick up the economy, and it helps, but it can't overcome the less than needed domestic spending in the Japanese economy.

There have been again pockets of inflation increasing to 3 percent from time to time but never really stays there that long and, for now at least, inflation overshooting is the least of BOJ's challenges and there are still just too many under the radar signs that deflation is still lurking in the economy.

And for the average household and average consumer in Japan price stability is the one of the most important variables if not the most important as households and consumers need price stability to plan their future spending and budgeting each day, week, and month.

I don't think its a situation where the BOJ was slow to recognize that underlying inflation had been reached but, again, the BOJ has been dealing with the presistent deflation situaton which is far more dangerous for an economy than inflation as they most likely kept their eye on the deflation situation while again maybe looking at inflation from time to time.

And yes, Japan's wholesale prices increasing to 7 percent might have escaped the BOJ's eyes at the beginning but they know full well what is going on and they are looking very carefully  as to what to do about the situation but it seems the BOJ, at this time, is not going on increase the key rate to try and lower inflation, as again delation is still lurking in the Japanese economy.

Yes, even though the BOJ's target of 2 percent might have been reached they might not need the zero rate policy that the BOJ had since around 2013 and they, at least for the time being recognizee that maybe just maybe real inflation has finally come back to Japan.

But again real inflation related to consumer spending and consumer demand is still relative weak in Japan as even though its not enough foreign tourist consumer spending, where foreign consumer have more purchasing power and with the weak yen can spend more and help the economy some but it doesn't take away the need for domestic spending by Japanese consumers.

Yes, there seems to be a combination of factors that has driven inflation and yes, too, maybe consumers in Japan are more accomodating of the increase in prices and companies and their profits margins are being squeezed by higher imports costs, and the labor shortage which is forcing companies to increase wages to keep the workers they have and get new workers too as all companies, or many companies, are now increasing wages.

And maybe just maybe as wages continue to increase workers are feeling better about their disposable income and might be getting out and spending more or at least spending more online these days.

Yes, Kodama is most likely correct that the BOJ's role only played a small part and global inflation has been a major factor in inflation reaching the 2 percent target and sometimes even moving past that target.

Of course there are always going to be disagreements as to what really increased inflation as there is a saying that you can have 100 economists and they will all give different answers or ideas about some topic or situation.

Yes, most central banks prefer to see inflation at or around 2 percent as they feel its a manageable number at that level there is enough money or currency flowing through the economy to either maintain or improve economic growth.

However its easy to blame the BOJ for not being able to reach the 2 percent target but it must be remember an economy is an organic system made up of many moving parts and with many sectors and each sector doesn't always cooperate with other sectors, so in retrospect the BOJ really didn't have that much control as there were/are just too many moving parts to control with just an increase or decrease of the key interest rate.

Yes normal everyday commodity prices are the major challenge now for Japanese households and consumers and even businesses are feeling the affects of normal everyday commodities and yes consumer demand in the Japanese economy is not that good yet, and wages, while improving are not enough for all consumers in Japan.

For example, only 30 percent of workers in Japan work for the large name-brand companies that can afford to give good wage increases as the other 70 percent of the workers in Japan work for small and mid-size companies that don't have the needed profit margins or resources, even they wanted to, to increase wages enough to get people spending in the economy again.

The weak yen is both a positive and a negative as it helps exporters and their prices in the US for example but it hurts importers as import prices increase due to the weak yen and naturally importers will pass-on their increased costs the next in the supply chain including the final retail customer.

And yes, Japan, being a resource-poor country has to import much of what it needs including much if not all of the energy it needs, even though in the past it used nuclear energy which it does sparingly now after the March 11, 2011 tsunami and earthquake situation

Yes you can always say what should have been or we should have done things differently but that doesn't help the current situation and the BOJ and government need to focus on what is happening now and give Japanese households and consumers the best chance to live their lives without being stressed out by high prices or high energy costs.

Have a nice day!

Article source:  https://mainichi.jp/english/articles/20261030/p2g/00m/0bu/049000c

BOJ and Inflation Target: Updated Oct. 31, 2026.

 

BOJ says 2% inflation target generally achieved, maintains policy rate

Ideas

Yes the goal target might have been reached but that doesn't mean that there could be some sectors still feeling the affects of deflation and at the same time some sectors might even be felling the affects of inflation well above the 2 percent target as somes its been noted inflation and reach 3 plus percent.

Yes keeping the benchmark interest rate unchange at 1.25 percent is good idea as there are gain pockets or sectors that might still be feeling the affects of deflation is not a one time tinkt that comes and goes as it can linger on or hang on again in different sectors in the economy.

It seems that has already happened, but most central banks prefer to keep or try to manage inflation at around 2 percent as they feel its a manageable level and there is adequate money  flowing through the economy too at the same time.

Also its seems there have been many times, since the pandemic have inflation has increased beyond the 2 percent target to sometimes above 3 percent which can be very stressfull for the lower middle class and even the middle class households in Japan.

Yes inflation in Japan is not sustainable and hasn't been stable as it often fluctuates and can sometimes get in the the 3 percent range and at the same time its not good as companies need stability in order to plan ahead and households too need stability in order to budget their finances correctly.

And yes, its not uncommon for there to be some dissenting voices and everyone sometimes has a different opinion about that what to do and when to do it and dissenting voices negatives and they are just giving differents idea about how to achieve a goal or target.

Yes, a dissenting voice sees things differently and sometimes feels a central bank might be moving too slow and needs to move quickly to fend off any possible inflation in the future.

But at the same time, as noted, there are key risks that need to be examined more carefully as the risks, as noted again, can affect an economy and maybe even reduce or slow down an economy too much.

At the time, in 2013, Japan was in a deflation period and getting inflation to the 2 percent seemed like a reasonable goal but its taken almost 13 years to reach that level as deflation and even stagnation were consistently challenging during those years.

And an aggressive monetary easing strategy might have seemed like the correct thing to do at the time as lowering the key rate was supposed to put more money into the economy and even spur business and consumer spending which it didn't really do or too a very long time to get businessa and consumers to spend.

External factors driving inflation is not the best way to get inflation to increase organically as consumer demand is always the best way to grow positive inflation, as increased demand but consumer spending is an incentive for companies to increase prices and maybe even spur them to increase hiring, increase investments, and a host of other positive actions.

Wage growth in Japan, has been a very resent situaton, as for the most part, many companies were not really giving adequate wage increases for a long time and, and with the governments urging companies started to finally increase wages in 2023.

And yes, deflation is still very much a situation in Japan as there are some sectors and regions in Japan experiencing some form of delfation and it's just a little too soon to say it's gone. 

Japan is a mature economy and as a result doesn't grow that much compared to India or China which are still considered emerging economies and still have a lot of resources to grow their economies.

A growth of 0.7 percent might not seem like that much for the size of Japan's economy its still a good amount of growth and should not be taken or seen and a negative.

Even though 2.5, 2.6, or even 2.4 is slightly above the 2 percent target it's probably still in the range that the BOJ might still see as being manageable. But it it were to increase to well above 2.5 then it might be a problem for the BOJ and they might need to begin to think about increasing the key rate to try and reduce inflation back down to the 2 percent range.

And as both the US Reserve and the EU central banks kept their rates unchanged the BOJ most likely is going to do the same thing, as for the most part, most or many central banks seem to follow what the US Reserves does, but the BOJ up until recently didn't do exactly why the Reserve did and kept their rate at zero or under.

Yes, the BOJ did increase its rate to 1.25 as for a very long time it had kept the rate at zero or near zero but just in the past year or maybe 18 months its has begun to increase the rate and there was change in leadership at the BOJ which meant a change in policy. 

But at the same time, its not a rate change happy organization, meaning its not looking to change or increase rate every month as the BOJ is still a very conservative group and the saying "do no harm" is still important for the BOJ.

And yes, of course the markets are expecting another rate hike in December but its too early to know exactly what the BOJ is going to do as things between now and December can change very quickly which could upset that normal workings of the Japanese economy but no one knows exactly what is going to take place between then and now.

Have a nice day!

Article source: https://mainichi.jp/english/articles/20261030/p2g/00m/0bu/041000c  

South Korea and Consumer Sentiment: Ideas Later.

Chip boom fails to lift spending as private consumption falls

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Korea's economy is growing on the back of a semiconductor export boom, but consumers aren't feeling the benefits.

Private consumption fell 0.2 percent in the third quarter from the previous quarter, marking its first decline since the second quarter of 2023, according to preliminary data on third quarter economic growth from the Bank of Korea (BOK), Tuesday.

Private spending growth had already slowed from 0.6 percent in the first quarter to 0.4 percent in the second before turning negative in the third.

Spending declined for both goods, including cars and home appliances, and services, such as financial and dining services.

The decline came even as the economy expanded 1 percent in the third quarter from the previous quarter, exceeding the central bank's forecast of 0.3 percent.

Weak private spending stood in contrast to stronger headline growth driven by robust semiconductor exports. While the export boom has lifted overall economic growth, its benefits have yet to result in a stronger recovery in domestic consumption.

The BOK attributed the decline in private consumption partly to a drop in financial services spending as stock trading volumes fell due to the sluggish stock market. It also pointed to delays in vehicle deliveries caused by a full-scale strike by Hyundai Motor workers in August, the first in a decade.

"Private consumption has not shown a particularly strong recovery so far, partly because of structural factors such as high household debt and population aging. We expect private consumption to gradually recover in the first quarter of next year," said Lee Dong-won, director general of the BOK's economic statistics department.

A sustained recovery in consumer spending remains uncertain amid inflation stemming from the prolonged conflict in the Middle East and volatility in the stock market.

The BOK's latest consumer survey also pointed to cooling consumer sentiment.

According to the central bank data released Tuesday, the composite consumer sentiment index fell 1.2 points from the previous month to 105.4 in October, reversing a one-month rebound.

The index, which combines six indicators of consumers' perceptions of current economic conditions and their outlook, is set at 100 for its baseline. A reading above 100 indicates that optimists outnumber pessimists.

Consumers also grew more pessimistic about current and future economic conditions. The current economic conditions index fell 1 point from the previous month to 82, while the economic outlook index dropped 2 points to 88.

Article source:  https://www.koreatimes.co.kr/economy/20261027/chip-boom-fails-to-lift-spending-as-private-consumption-fallsSouht 

South Korea Q3 Growth: Ideas Later.

Chip exports drive Korea's Q3 growth to 1%, triple BOK forecast

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GNI per capita almost certain to top $40,000 in 2026 for 1st time: finance ministry

Korea's economy expanded 1 percent in the third quarter from the previous quarter, extending its stronger-than-expected growth on the back of booming semiconductor exports, the Bank of Korea (BOK) said Tuesday.

After exceeding expectations in the first and second quarters, the economy continued to outperform forecasts in the third quarter, putting annual growth within reach of 3 percent, with some saying it may even reach up to 4 percent.

Preliminary data from the central bank showed that real gross domestic product (GDP) rose 1 percent in the July-September period, significantly exceeding the BOK's own projection of 0.3 percent for the quarter.

The country's quarterly growth rebounded sharply to 1.8 percent in the first quarter from a 0.1 percent contraction in the fourth quarter of 2025, before standing at 0.6 percent in the second quarter, also beating expectations.

In the third quarter, facilities investment rose 4.1 percent, mainly on increased investment in machinery, including semiconductor manufacturing equipment. Investment in intellectual property products grew 2.3 percent as spending on research and development and software increased.

Exports grew 2.3 percent, driven mainly by semiconductors and electrical equipment. Imports rose 2.4 percent, led by increases in crude oil and semiconductor manufacturing equipment.

By industry, manufacturing grew 2 percent, led by computers, electronic and optical equipment, as well as machinery and equipment.

Agriculture, forestry and fisheries rose 5.9 percent, led by crop cultivation and fishing. Services edged up 0.2 percent, supported by business services, information and communications, and transportation.

The stronger-than-expected growth is likely to prompt the BOK to raise its 3.3 percent growth forecast for this year, announced in August. The central bank is scheduled to release its revised forecast in November.

Lee Dong-won, director general of the BOK's economic statistics department, said an annual growth of 4 percent remained possible depending on the economy's performance in the fourth quarter.

If achieved, it would mark the highest annual growth rate in five years, since the economy expanded 4.7 percent in 2021.

"Even if growth in the fourth quarter is flat compared with the previous quarter, annual growth would mathematically come to 3.6 percent. If the economy grows 1.4 percent or more in the fourth quarter, an annual growth of 4 percent would be possible," Lee said during a briefing.

"Computers and electronic equipment, including semiconductors, accounted for about 60 percent of GDP growth from a year earlier, with semiconductors alone estimated to have contributed about half."

The Ministry of Finance and Economy said the latest GDP data makes it almost certain that Korea will achieve a per capita gross national income (GNI) of $40,000 this year.

The Korean won's appreciation against the U.S. dollar and an upward revision to the GDP growth outlook are both contributing to the increase in per capita GNI.

"The country's per capita income, which has remained in the $30,000 range, is expected to rise to the $40,000 range. It is encouraging that there is further momentum for it to rise even higher," a ministry official said during a briefing.

Per capita GNI is calculated by taking the total income earned by a country's residents at home and abroad and dividing it by its population. It is commonly converted into U.S. dollars to compare living standards across countries.

If achieved, the milestone would come 12 years after Korea's per capita GNI first surpassed $30,000 in 2014.

Article source:  https://www.koreatimes.co.kr/economy/20261027/cover-story-chip-exports-drive-koreas-q3-growth-to-1-triple-bok-forecast

Japan and Deflation: Updated Oct. 27 2026.

Japan minister urges caution on declaring end to deflation

Ideas

The BOJ has been trying for almost a decade or more the reach the 2 percent inflation target which most central banks see and a manageable level but hasn't been able to get there just yet.

Yes,"careful judment" is the correct response as there might be some positives but at the same time there are some significant negative related to deflation too.

For example some consumers and households might see delation a good as their purchasing power might increase and of course lower prices but at the same time for businesses deflation is a real job killer and business investments might decrease significantly too.

Yes the government needs to be sure it makes best assessment as the stock market and businesses will be watching and the stock market increases or decreases on what kind of communiciation comes and business too the same thing many times related to investment and capital spending.

Slipping back into deflation could mean the possibility of less hiring and less investments and many other economic activities that could undermine growth of the Japanese economy in the future.

Yes, its taken 14 years for the BOJ to get inflation under control as whatever strategy they have tried just hasn't worked and to be fair it hasn't been without trying but at the same time the BOJ hasn't followed the usual script of increasing the key rate as many times it would often say the economy is just too weak at this time to increase the rate as their might be too many side affects.

The problem is that since 2022 inflation on many things in Japan has been above the 2 percent target so not only is the BOJ having to manage inflation above the 2 percent target but at the same time trying manage the idea that deflation in many sectors in the economy was still a lingering challenge.

So the BOJ has been trying to manage both inflation and deflation at the same and the've had to be very cautious and one strategy which works for one situation can trigger the negative for the other situation.

Yes, while temporary factors are important to look at and try to manage them correctly the real challenge seems to be wage increases and here is where it gets very challenging as for example the media likes to talk about the name-brand large companies that get all the news but only about 30 percent of worker in Japan work for the large companies, which get the large wage increases while 70 percent of the workers in Japan work for small and mid-size companies that just don't have the profit margins or resources to give the same wage increases as the large companies do, even though the small companies would like to give better wage increases.

As a result, Japan now seems to have a two-teired  economy of the haves and the have-nots and the haves are getting all the benefits and the have-nots in many cases are being left behind and it seems like no one is really paying attention to what is really going in the economy.

Yes monetary easing might help with the 2 percent target and it would maybe give more incentives for consumer buying or borrowing money by both busiensses and houesholds but at the same time it might have a few negatives too such a even though interest rates would decrease it might cause those with hefty bank savings and so on too feel like they are losing out on increases in their saving or invesments.

Yes the BOJ is very conserstaive and the goal is always, for the most part, do no harm, and any communication or statement they might make, again, could cause the stock market to increase or decrease and cause some businesses or many re-think their capital spending and investments in the economy which the BOJ tries not cause too much harm.

Have a nice day!

Article source:   https://mainichi.jp/english/articles/20261023/p2g/00m/0bu/033000c

Japan Dept. Stores: Updated Oct. 26, 2026

Japan dept. stores see record duty-free sales, shoppers in Sept.

Ideas

Tourism, especially foreign tourism or foreign tourists, is becoming an economic driver of the economy as it seems foreign tourism spending is now a major economic activity in Japan.

Of course the weak Japanese yen is the major driver of sales in department stores and even not to sales but the number of shoppers too and it seems many foreign tourists are taking advantage of the increased purchasing power the weak yen brings.

Having been to Japan many times and seen all of the duty-free signs and, and at least for me and my partner, going through the steps needed to get 10 percent duty-free discount just wasn't worth it at as it took a long time, at least at the two stores that we tried to get the discousant. 

Maybe the process has now improved but back then just before the pandemic it seemed to be more hassle that good for only 10 percent. but maybe they've streamlined the process now.

Maybe the spending of some customers is enough, with process being more customer friendly now, hopefully and if a customer does spend around  101,000 yen they could get back 10,100 yen, possibly but I guess it depends on other things too , which might still be worth it and again if the process now have become for friendly and less time consuming.

For example in South Korean in Sept. was the Korean thanksgiving holiday called Chuseok, and these days, many Koreans don't go to their hometowns but many prefer to travel and as the holiday this time was only 4 days that is a perfect short trip to Japan to take advantage of the weak Japanese yen and spend a little more.

Yes, the numbers from China might have decreased but Chinese consumers/customers are now moving more and more from the lower middle class to the middle class and even the upper middle class and they want to travel and have money to spend and as the yen is weak the have more purchasing power to spend in Japan.

But as suggested in other articles not all Chinese are following what Beijing is saying as there is still a sizable number traveling to Japan to take advantage of the weak Japanese yen.

An increase of 2.1 percent might not be bad but of course it depends on what share-holders think is good and of course they, for the most part, are never satisfied and always want more.

It interesting that there are 69 companies that run 169 stores in Japan which shows that no one company has a monopoly on stores or sales.

But it must be remembered, that even though there are 68 stores not all are equally profitable and its been suggested that only a handfull, mostly in the major metro areas, are making a profit and many in the rural areas or less than metro areas are not doing so well these days.

And those doing well in the major metro areas have transitioned to catering to the so-called upper middle class foreign tourists who have money to spend and burn and those dept. stores are doing very well.

Have a nice day!

Article source:  https://mainichi.jp/english/articles/20261023/p2g/00m/0bu/057000c