In Japan, from the mid-1990s onward, it has been pointed out that deflation has led to sluggish output growth, exacerbating the nonperforming-loan problem and the fiscal deficit problem.4 While the United States and the United Kingdom struggled to maintain positive inflation, they somehow succeeded. However, the situation seems different in the case of continental Europe.
For example, as seen in the charts, inflation in Germany, France, and Italy has not reached 1 percent in 2012-17, so it can be said that they are under deflationary pressure. Meanwhile, Japan has recovered from the deflation observed in 1995-2012, but the rate of increase in the consumer price index (CPI) has not yet reached 1 percent.