Japanese Authorities Look to Wage Increases to Fight Deflation

The Japanese government has thrown everything but the proverbial kitchen sink at deflation, which has dogged the nation for most of the past quarter century.

As you may know, almost four years ago, Japanese Prime Minister Shinzo Abe unleashed a three-pronged stimulus program known as "Abenomics," which was comprised of fiscal stimulus, monetary easing and structural reforms.

So far, the stimulus initiative has fallen short of expectations.

In August, Japan's core consumer price index declined 0.5% from a year ago. This was the sixth straight monthly decline.

Now, Abe is looking to wage hikes as a weapon to defeat deflation.

Read this excerpt from an Oct. 1 Japan Today article:

Japanese Prime Minister Shinzo Abe voiced hope that wage hikes by companies would lead to an exit from deflation as pursued by the government and the Bank of Japan.

"I expect that moves to increase wages will spread in the entire business circle and lead to an exit from deflation," Abe told a meeting of the Council on Economic and Fiscal Policy on Sept. 30.

At the gathering, private-sector members of the government panel called on the government to hold discussions for realizing wage hikes in spring wage negotiations next year, arguing consecutive wage increases would bring an end to deflation.

You can review the entire article by following the link below:

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