Japan Urges Businesses To Raise Wages As Prices Increase

Japan on Friday, July 29, 2022, urged companies to raise wages on par with price hikes of around 2 percent, a level the central bank has set as its inflation target so that the world's third-largest economy can complete its exit from deflation, Mainichi Japan reported.

Photo Insert: The government said in its Annual Report on the Japanese Economy and Public Finance that such an economy will block the country from falling into stagflation.

The government said in its Annual Report on the Japanese Economy and Public Finance that such an economy will block the country from falling into stagflation, at a time when the United States, Europe, and others are suffering from price surges fanned by Russia's war against Ukraine.

It was the first such paper compiled under Prime Minister Fumio Kishida, who pledges to bring about "new capitalism," characterized by a virtuous cycle of growth and redistribution driven by investment in people.

The document underscored "the need to shift to a new system that features sustained and stable price increases of about 2 percent and corresponding wage growth rates."

"Given that the economy continues to be picking up and the rate of price increases is not significantly high, Japan is not in a state of so-called stagflation," which involves slow growth and high inflation mixed with high unemployment, it said.

The rate of price hikes in Japan is higher than that in the recent past, but it is attributable primarily to surging import prices driven by crude oil prices, said a government official who briefed reporters.

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