By Megumi Fujikawa
Bank of Japan Policy Board member Seiji Adachi said on Wednesday he was more likely to see the country’s inflation rate rise after years of flat prices.
Mr. Adachi pointed to a change in the pricing behavior of Japanese companies and an improvement in their growth expectations.
“Now that the COVID-19 situation has started to calm down, companies are gradually increasing the prices of their goods and services,” Mr. Adachi said in a speech.
“Some anecdotal evidence suggests that the pandemic has prompted an increasing number of firms, particularly in a consumption-related industry, to change their ‘low-margin, high-turnover’ business models – which in the past have been quite common. Were – taking into account the structural changes in customer needs,” he said.
Mr. Adachi said companies have become more active in business investment, which in turn shows that they are willing to aim for higher profitability by raising the prices of their goods and services.
“Higher margins earned by firms through price increases can lead to an increase in wages and is expected to act as a great catalyst to achieve the 2% price stability target,” he said.
Still, recent government data shows that Japan’s consumer prices rose just 0.1% in October from a year earlier.
Write to Megumi Fujikawa at [email protected]