AMO Insight ‘Sustainability of Inflation in Japan Hinges on Service Prices’


Service prices, which are key to sustaining stable inflation, are rising in Japan.


Wages, which are easily reflected in service prices, experienced a significant increase during the spring labour negotiations. However, the Bank of Japan remains cautious about the sustainability of inflation. It recognises the need for established corporate behaviour, including wage increases and appropriate price transfers, especially among small and medium sized enterprises.


The government plays a significant role in promoting labour market reforms and ensuring appropriate pricing by companies. The current inflation resulting from increased import costs is expected to progress towards a “positive cycle of wages and prices” with wage increases and changes in pricing behaviour.

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