Since the 1980s, except for the period immediately after the bursting of the bubble, the yearon-year rate of change in the CPI in Japan remained consistent, at a level below 2 percent.
There has been a delay in adjusting Japan’s economy in response to structural change such as rapid population aging and increasing globalization, and as a result the potential growth rate as well as firms’ and households’ medium- to long-term expectations for growth have been declining.