Against this background, the output gap has improved steadily, and corporate profits have marked record highs. The labor market is very tight, at virtually full employment (Chart 6). On the price front, annual CPI inflation excluding fresh food and energy has been positive as a trend for about four years.
This is the first time since the end of the 1990s that such positive developments are being observed in Japan. We judge that the economy is no longer in deflation, which is generally defined as a sustained decline in prices. These developments indicate that Japan's economy has been improving steadily.