The Consumer price inflation in Japan attained a value of 2.63 % in 2024
GlobalData projects the figure to change by 116 bps between 2025 and 2029, reaching...
Inflation
Inflation is an upsurge in the level of prices of the goods and services in an economy, which leads to a decline in the purchasing power of the currency’s value. It is calculated as the rate of change in prices in a specific period. The consumer price index (CPI) is one of the most common indicators for measuring inflation in an economy.
Global Inflation
Global inflation is a measure of the average annual rate of growth increase in national prices across all countries. It can be calculated using various methods including simple average, weighted average, and median price change. Global Data forecasts that the world economy will grow at a slower pace of 3.5% in 2022 following a 5.9% growth in 2021. On the other hand, the global inflation rate is projected to rise to 6.5% in 2022 from 3.5% in the previous year due to supply chain disruption amid the Ukraine-Russia war.
Consumer Price Inflation in Japan
Between 2018-2021, the consumer price inflation in Japan was negative 0.2% in 2021, increased by 7.5% over the previous year 2020. Between 2018 to 2021, Japan’s consumer Inflation decreased by 1.2%.
The low level of inflation has been a cause of concern for policymakers in the country. The extra loose monetary and fiscal policy of the central bank and government has failed to achieve the target of 2% inflation, as of December 2021. According to GlobalData, inflation stood at -0.2% in 2021 and it is forecast to increase to 0.4% in 2022. According to the Statistics Bureau of Japan, the inflation rate in Japan stood at 0.5% in January 2022.
Persistently low inflation in the Japanese economy could pose risk to the recovery process of the country. The low inflation level in Japan is indicative of low domestic demand and consumer spending, which could be detrimental to the country’s already stumbling recovery process.
Factors that Impact Inflation Rate
Some of the major factors affecting consumer prices are government policies, money supply, consumer spending, employment levels, high disposable income, and wage levels. Interest rates can also have a significant impact on spending on consumer goods.
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