Japan government says end of deflation near

Japan government says end of deflation near.

According to the Japanese government, the country is getting closer to the end of deflation. It offered the most confident view on prices in almost four years, on the back of a steady pick up in the economy.

The government also changed its assessment on the job market to say it is “improving,” as falls in the yen set off by Prime Minister Shinzo Abe’s policies boosted manufacturers’ profits and sent the jobless levels down to pre-Lehman levels.

“Recent price developments indicate that deflation is ending,” the government said in a monthly economic report for August, offering a brighter view than last month when it said deflationary pressures were easing.

However, a government official who briefed journalists on the report said that it was too early to say that Japan had made a sustained exit from deflation. Doing so would require more lasting rises in consumer prices, he said.
Japanese consumer prices rose in June for the first time in more than a year, although most of the increase was due to higher electricity bills rather than stronger demand that could drive a durable recovery.

The government has described the Japanese economy as in deflation since November 2009. Removing the word “deflation” from the report, or declaring that deflation is over, would signal an important success in its battle with price declines.

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