The Japanese government has began discussions over officially declaring an end to deflation, news agency Kyodo reported over the weekend, citing sources close to the matter.
For this, the government will carefully examine the outcome of wage negotiations this spring and the inflation outlook, the report said.
An end to deflation is expected to give a boost the Japanese economy. Prices have been rising and there have been calls for wage increases bigger than those last year.
The declaration would be made by either the Prime Minister Fumio Kishida or Cabinet members, Kyodo said. Another possibility is the government making a statement in its monthly economic report.
Last week, Bank of Japan policymaker Hajime Takata said the central bank may start thinking of an exit from its ultra-loose monetary policy as the 2 percent price goal is finally coming into sight. However, BoJ Governor Kazuo Ueda maintained that it was too early to conclude that the inflation target has been attained. Udea sought more evidence of strong wage growth and consequent hikes in price and pay. The annual wage negotiations that concluded recently would throw some light on the future path.
In February, the government downgraded its view on the economy for the first time in three months, citing weaker consumer spending and industrial production.
The Cabinet Office said in its monthly report, "The Japanese economy is recovering at a moderate pace, although it recently appears to be pausing."
Japan lost its position as third largest economy after official data showed that the economy had slipped into a recession in the fourth quarter of 2023. GDP decreased 0.4 percent from a year ago after a 2.9 percent contraction in the third quarter.
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December 26, 2025 08:42 ET Third quarter economic growth data from some major economies including the U.S. were the main news in this holiday shortened week. GDP growth and industrial production data from the U.S. helped to boost morale, while the consumer confidence survey results were less upbeat. In Europe, the quarterly economic growth data from the U.K. drew attention, while the minutes of the Australian central bank’s latest policy session was in focus in Asia.