BOJ Report Cites Multiple Factors behind Low Inflation

Economy Politics

Tokyo, Aug. 1 (Jiji Press)--A Bank of Japan report suggested Wednesday that multiple factors, including people's persistent tendency to spend less and labor participation by women and elderly people who work with low wages, are behind the country's continuously slow inflation.

In the full text of its Outlook for Economic Activity and Prices report, the BOJ examined in detail causes for the sluggish pace of consumer price growth in Japan although the country's economy has been recovering. The BOJ, which aims to raise year-on-year consumer inflation to 2 pct, intensively discussed the price trend at its two-day monetary policy meeting that ended on Tuesday.

Due to the combination of the factors, also including the growing popularity of online shopping, it has been "taking time for the inflation rate to rise," the full economic and price outlook report said.

The quarterly report said that "households' tolerance of price rises has not been increasing clearly" partly because it has been taking time for wage increases to fully take hold and cautious views about the course of the economy and the social security system going forward have been persistent.

Companies remain cautious about raising wages of full-time workers because medium- to long-term growth expectations "are not rising sufficiently," it said.

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Jiji Press