This is a measure of inflation that is based on the rate of increase in the prices of all goods and services, including those related to food and energy. That rate currently stands at 1.6 percent, which is below the FOMC’s target of 2 percent.
However, as I will explain, the fundamentals of Japan’s economy are sound and the environment surrounding firms and households has significantly improved compared to some years ago. Moreover, the underlying trend in inflation has been improving steadily. Quantitative and qualitative monetary easing (QQE), which the Bank introduced in April 2013, has been exerting its intended effects toward overcoming deflation.