Japan: inflation falls and without restrictive policies. The Japanese are not the Germans…

24 March 20231 year ago babelfish

Among the Western countries, or allies of the USA, only one has not profoundly changed its monetary policy, despite the change at the top of the central bank: Japan. This country has seen a change of governor of the BoJ, the central bank, with the departure of Kuroda and the entry into office of Kazuo Ueda, but the policy of expansion and control of interest on government bonds has not changed radically . Yet this country controls inflation much, much better than Europe.

Japan's annual inflation rate fell to 3.3% in February 2023 from a 41-year high of 4.3% in January. The latest data also marked the lowest printout since last September, as the cost of transport increased the least in 5 months (1.7% compared to 2.1% in January); while the prices of fuel, electricity and water fell for the first time since May 2021 (-0.3% compared to 14.9%), especially electricity (-5.5% compared to 20.2 %) and gas (12.5% compared to 24.3%). Conversely, inflation remained unchanged for the home (1.3%), while it accelerated for clothing (3.6% vs 3.1%), furniture and household utensils (8. 7% vs 7.7%), medical care (0.9% vs 0.5%), education (0.9% vs 0.7%) and sundry expenses (1.3% vs 1. 1%). Furthermore, the cost of foodstuffs recorded the largest increase since September 1980 (7.5% against 7.3% in January). Core consumer prices rose 3.1%y/y, the lowest in 5 months, meeting forecasts but exceeding the Bank of Japan's 2% target for the 11th consecutive month. On a month-to-month basis, consumer prices fell by 0.6% in February, the first drop since October 2021.

Here is a short-term chart

3.3% is almost acceptable inflation and it was achieved without driving interest rates crazy and without blowing up the banking system. Who knows how they managed it, above all without shouting about the inflation emergency from morning to night like the Germans do and without invoking 100% interest. Maybe maybe because they act not ideologically, but on an empirical basis, and frankly I'm very envious…

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The article Japan: inflation falls and without restrictive policies. The Japanese are not the Germans… it comes from Scenari Economici .

This is a machine translation of a post published on Scenari Economici at the URL https://scenarieconomici.it/giappone-linflazione-cala-e-senza-politiche-restrittive-i-giapponesi-non-sono-i-tedeschi/ on Fri, 24 Mar 2023 09:00:21 +0000.