Japan not ready to declare deflation over, economy minister says

Japan still lacks sufficient evidence to formally declare an end to deflation, Economy Minister Minoru Kiuchi said on October 23, highlighting differing government and central bank assessments ahead of a Bank of Japan policy meeting.

Speaking at a news conference, Kiuchi said the decision required a broad review of consumer prices, the GDP deflator and the forces behind underlying inflation. He stressed the need to ensure that persistent price declines would not return.

Figures published on October 23 showed that September's core consumer price index increased 2.1% from a year earlier. The measure includes fuel but leaves out volatile fresh food prices. Core inflation has stayed close to the BOJ's 2% goal for four years, with fuel subsidies helping to limit price pressures.

At its forthcoming meeting, the BOJ is expected to leave interest rates unchanged, raise its inflation forecast and indicate that further increases in borrowing costs remain planned. It is also expected to signal that underlying inflation has reached 2%, as the Iran war's energy shock and a weak yen lift costs.

Kiuchi urged the BOJ to pursue its inflation objective sustainably while respecting a joint statement agreed with the government in 2013 and reaffirmed in 2025. That agreement committed both sides to ending deflation, including through monetary easing. Kiuchi, who has expressed reservations about planned rate increases, has said he hopes to attend the policy meeting.