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Representatives of Japan’s largest business group expressed hope Sunday that Prime Minister Fumio Kishida’s government will take the necessary steps to fully combat the country’s decades of deflation.
In a speech at the annual convention of Mr. Kishida’s Liberal Democratic Party, Masakazu Tokura, chairman of the Japan Business Federation, known as Keidanren, said Japan’s economy was trending upward on the back of strong wage growth.
Tokura said, “It is important for the country to work together to make this year a historic turning point towards completely overcoming the deflation that has lasted for 30 years.” He vowed to help strengthen the world.
His remarks come after a preliminary survey by the Japan Federation of Labor Unions, known as Rengo, found that domestic companies have agreed to an average 5.28% wage increase in negotiations with labor unions this year, the sharpest wage increases in more than 30 years. This was a few days after the agreement was announced.
According to sources familiar with the matter, the Kishida administration began considering earlier this month whether to formally declare an end to deflation or declare a continued decline in prices, given recent increases in Japanese corporate profits.
In 2023, Japan’s core consumer prices (excluding volatile fresh food) rose 3.1%, marking the fastest growth in 41 years.
Meanwhile, sources said the Bank of Japan plans to lift negative interest rates at its two-day monetary policy meeting ending Tuesday, marking the first interest rate hike in 17 years and a break from years of unprecedented easing.
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