August 28, 2024
Bank of Japan

Japan's Economy and Monetary Policy

Speech at a Meeting with Local Leaders in Yamanashi

HIMINO Ryozo
Deputy Governor of the Bank of Japan

(English translation based on the Japanese original)

Introduction
Good morning, all. I am happy to be here in Kofu, a city surrounded by high mountains. I
was born in Toyama and grew up gazing at the northern chain of the Japan Alps. Arriving

here yesterday, I felt somewhat familiar with the sight of the southern chain.

One of the greatest 16th century warlords, Takeda Shingen, who was from this region, had

the following poem on his banner:

Swift as the wind,
silent as forests,
ravaging as fire,

and still as mountains.

Does this banner describe the four different approaches to be used at different junctures of
war? Perhaps not. Seeing the mountains Shingen himself saw in his days, I was reminded of
the awe and respect that the stillness of the mountains evokes, a stillness that hides the
swiftness of the wind and the relentlessness of fire within itself. The silence of the forests, it

seems, is also filled with vigor.

I. Economic Activity and Prices

Hermeneutics aside, let us begin by looking at the outlook for Japan's growth and inflation.

First, about the growth. The Bank of Japan expects the real GDP to grow at a moderate rate
of 0.6 percent this fiscal year, as the recovery process from the pandemic draws near to
completion. We, however, expect that the ongoing wage hike will start boosting consumer
spending and that the record-high corporate profits will sustain the strong growth of
business fixed investment. According to our forecast, these developments will gain traction
from the middle of the fiscal year, and the real GDP will grow at around I percent in fiscal
2025 and 2026, a level that is slightly above the potential growth rate (Chart 1). We estimate

Japan's potential growth rate to be somewhere between 1/2 and I percent.

Let me turn to prices. Reflecting the global commodity price hike, the annual average
consumer price inflation rate was around 3 percent in fiscal 2022 and 2023, exceeding the
Bank's price stability target of 2 percent. Inflation rates for food and other daily necessities
have been even higher than 3 percent, burdening households. We, however, expect that
inflation will gradually decelerate and that the CPI inflation rate for fiscal 2025 and 2026

will be at around 2 percent, in line with the target.

In sum, our baseline scenario for fiscal 2025 and 2026 envisions a reasonably balanced state,
where the inflation rate is consistent with the price stability target and the economic growth
is slightly above cruising speed. To this day, Japan's economy has been characterized by a
variety of excesses and shortfalls. The economy overheated during the bubble economy era,
and a period of deflation ensued after the asset price bubbles collapsed. Although Japan
subsequently made strides toward the goal of fully extricating itself from deflation, the
economy slumped after the pandemic and was then hit by rising prices. The Bank, however,

expects to see the long-awaited balanced state starting around next fiscal year.

Will that really happen?

So far, prices have moved in line with the expected path. Although economic activity earlier
in the year was weaker than was previously expected, temporary factors, such as a

suspension of auto production due to certification test issues, largely account for this.

I believe that the baseline scenario for the future remains that growth and inflation will
develop in line with the Bank's outlook. That said, we should mind risk scenarios as well.
Let us look at two of them: (1) the scenario of the current above-2-percent inflation not
abating and (2) the scenario of the inflation rate sinking well below 2 percent and not

reverting.

Comparison with the United States and the Euro Area
The first question is whether the inflation rate will really moderate and reach the 2 percent
target. I occasionally hear the following question from those from the United States and the

euro area: although the Federal Reserve and the European Central Bank have responded to

the import price shock with stringent monetary tightening, inflation has remained above the
target; Japan has maintained accommodative financial conditions, but is a bout of inflation

not forthcoming (Chart 2)?

The rise in the prices of products imported by Japan from mid-2020 to mid-2022 was, due
to the depreciation of the yen and other factors, much higher than the import price hike
experienced by Germany, and far more drastic than that experienced by the United States.
On the other hand, the United States is almost self-sufficient in energy and is a food
exporter. Germany depends on domestically produced energy and food much more than
Japan does. Thus, the impact of rising international commodity prices on Japan must have
been much greater than on the United States and the euro area. Yet, while the inflation rate
was above 10 percent in the euro area and reached 9 percent in the United States, in Japan it
was 4 percent at its peak. No wonder some people in the United States and the euro area

question why this happened in the absence of monetary tightening (Chart 3).

What is the answer? The CPI consists of the prices of goods, services, and housing rent. I
would first like to look at prices of goods, which tend to be more directly affected by higher
import prices (Chart 4). Since the end of 2020, the prices of goods have risen cumulatively
by 26 percent in Germany, 20 percent in the United States, and 16 percent in Japan. Why

has Japan, which experienced the greatest import price shock, seen a less sharp rise?

To compare the actual cumulative increase in goods prices, I made a counter-factual
estimation of what would have happened if firms had fully passed on input price changes
successively to other firms and then to consumers and if such a pass-through had taken
effect instantaneously. In doing so, I used the input-output tables to see what kind and how
much of direct and indirect inputs are used to produce a particular item. The assumption
may sound unrealistic or extreme, but we may be able to learn something by comparing the

reality with the counter-factual.

I considered the impact of three types of input price changes. The first is the impact of the
rise in prices of imported energy and food. Second, I added the impact that the rise in prices

of domestically produced energy should have had if they had moved in line with global

market prices, to account for the difference between the United States, which is a major
petroleum-producing country, and Japan and Germany, which are major importers. Lastly, I
also looked at the impact of wage increases during this period to see the role of non-import

price factors (Chart 5).

This is a static, simple, and rough estimate, and we should be careful when assessing the
results, but let me outline them. For Japan, the impact of the import price increases
accounted for bulk of the increase in the prices of goods, reflecting the sharp rise in import
prices and low self-sufficiency rates. On the other hand, in the United States, the impact of
the rise in the prices of domestically produced energy and in wages was much greater than
the impact of import price increases. Germany lies somewhere between Japan and the

United States.

Initially, the developments in the prices of goods in reality closely tracked the
counter-factual estimate of the immediate and full pass-through in the United States and
Germany. On the other hand, the pass-through was much more gradual in Japan. Japanese
firms at the time were cautious about passing on cost increases to prices. I suppose the
energy price measures taken by the Japanese government have worked to alleviate sudden

price movements as well.

In Germany, the part of the actual price movements that the three factors do not account for
also grew significantly afterward. I cannot tell what this part is, but one analysis argues that
firms in the euro area expanded their profit margins and thereby pushed up prices further,
and another indicates that the impact of supply bottlenecks was greater in Germany than in

other advanced economies.!

' See Box 3 "Features of and Reasons for Price Rises in the Current Phase: Comparison with the
United States and Europe" in Bank of Japan, Outlook for Economic Activity and Prices, July 2023,
for analysis on profit margins of firms in the euro area and their impact on prices. See also Figure 8
"Historical decompositions of inflation" in Bernanke, B., and Blanchard, O., "An Analysis of
Pandemic-Era Inflation in 11 Economies," Hutchins Center Working Paper #91, May 2024, for a
cross-country comparison of the impact of the supply bottlenecks.

In short, it may be argued as follows: while the price hike of imported energy and food had
a large impact on Japan, the impact of other factors was much smaller, and the aggregate

impact on the prices of goods was smaller than in the United States and Germany.

Next, let us look at developments in the prices of services excluding housing rent. The
difference between Japan, the United States, and Germany has been much larger than for
the prices of goods (Chart 4). The core cost of providing services is wages. In the United
States, unemployment rose by nearly 20 million at the onset of the pandemic, and a sizable
increase in wages has been necessary to encourage workers to return to the workforce after
the pandemic (Chart 6). This may explain part of the large difference in services price

developments.

Among the three types of input price changes I mentioned earlier in explaining the
developments in prices of goods, the rise in prices of imported energy and food results in
increased payments to overseas exporters. Meanwhile, the rise in prices of domestically
produced energy and the wage increase result in increased payments to the energy industry
and workers in that country. Due to commodity price hikes, Japan, a net commodity
importer, has experienced a huge decline in national income, while the United States, a net
exporter, has seen an increase in income. Japan's terms of trade deteriorated while those in
the United States improved (Chart 6). Deterioration in the terms of trade tends to negatively
affect wages. This may also explain part of the differences in the developments in wages

and services prices in Japan, the United States, and Germany.

Lastly, developments in housing rent have differed greatly between these economies. In the
United States, housing rent has accounted for more than 30 percent of the CPI, and rent
levels have risen rapidly in the meantime. In Japan, the rise in rent levels has been minimal.
Rent levels in Germany have risen more than in Japan, but not as much as in the United
States. This difference should also have contributed to the difference in the overall

consumer price developments (Chart 4).

These may be the reasons why Japan had a smaller CPI hike while being hit by a much

bigger import price shock.

Wages and Consumption

That said, in Japan, a moderate increase in services prices has been observed since 2022 and
the potential contribution of wage increases to goods prices is picking up recently (Charts 4
and 5). These developments along with other data show that the pass-through of the past
import price hike is waning while a moderate and sustainable virtuous cycle between wages

and prices is emerging."

What about, then, the possibility that the virtuous cycle between wages and prices fails to
grow further while the effects of the import price shock dissipate? Under that scenario, the
inflation rate may sink well below the 2 percent target and stay there. In other words, what

about the possibility of underlying inflation not reaching and remaining below 2 percent?

The future of the wage-price cycle will depend on both overseas and domestic factors. Key
domestic factors include (1) whether wage hikes will continue, (2) whether consumer
spending will stay unfaltering and thus firms will continue to be able to pass on wage
increases to selling prices, and (3) how recent market volatilities including weaker stocks
and the stronger yen affect the economy and prices. These three are intertwined, but let me

look at them one by one.

The first factor is the outlook for wage hikes. The strong outcome of this year's annual
spring wage negotiations is being reflected in monthly pay. Tighter labor market conditions
and strong corporate profits have also supported wage increases. This is observed in wage

statistics already.

The question is whether wage hikes will continue in fiscal 2025 and after. We often hear
from small and medium-sized firms that, while they raised wages this year to retain
personnel and support employees' living, they have not been able to pass on the labor cost
increase to selling prices and that their profits are squeezed. We also hear often that many

immediate challenges make it impossible to plan for next year's wages. On the other hand,

? See Ueda, K., "Virtuous Cycle between Wages and Prices and the Bank of Japan's Monetary
Policy," speech at a meeting held by the Yomiuri International Economic Society in Tokyo, May 8,
2024.

an increasing number of firms argue that they see no alternative than to continue raising
wages if they are to attract employees, particularly younger ones, and keep them well
motivated. We increasingly hear that, since wages will rise every year anyway in these new
stages of the economy and labor market, their strategic focus will be on pricing policy,
productivity-enhancing investments, business portfolio restructuring, collaboration with

other firms, and mergers and acquisitions.

These comments from small and medium-sized firms seem to show both the opportunities
and the pains the structural changes in the economy and labor markets are bringing in. I had
an opportunity to hear from CEOs of regional banks and noticed some common threads
among some of their remarks: divergence between customer firms is growing, and overall
trends are becoming less effective in describing the situation; business activities are
recovering moderately, but there are stronger and weaker spots; and they -- the bankers --
need to customize approaches to support their customers in line with the different

challenges they face.

The second question is if consumption will stay unfaltering so that firms will continue to
pass on wage increases to selling prices. Households in general are increasingly keen to
thrift and save, although some of them are becoming less sparing on "special day
expenditures" and spending for their particular tastes and interests. Will thrift and save lead

to inflection in consumption?

I believe that the baseline scenario is that this will not be the case. The strong results of the
annual spring wage negotiations are being reflected in monthly pay, summer bonuses seem
to be strong, income tax cuts will take effect, and inflation, which is one reason for the thrift
and save behavior, is moderating. These will all support consumer spending, although we
need to be mindful of the risks, such as that inflation will not moderate as expected and

continue to push down real wages.

The third question is about the effects of recent market volatilities including weaker stocks
and the stronger yen. As we have yet to hear fully from firms about the effects and statistics

have yet to reflect them, we have to closely monitor developments here. That said, it may be

argued that the recent partial reversal of the yen's past depreciation can curb the upside risk
to prices arising from higher import prices and thus the downside risk to consumer spending.
It could also be argued, however, that the stronger yen may affect inbound tourism demand

and weaker stocks may work to reduce the consumption of luxury products.

The yen's recent appreciation may alleviate the import cost hike and profit squeeze many
small and medium-sized firms currently face. On the other hand, it may lower the
yen-denominated profits of export industries and Japanese multinationals. However, the
weaker yen was surely not the sole reason for these firms' record-high profits. There is not a
wide gap between current yen rates and the rates assumed in their business plans. Stock
price volatilities will affect business sentiment, but need not affect it too much: Japanese
firms have transformed themselves and formed competitive edges, and such strengths will

remain.

In the past, we often worried about the impact on banks when stock prices plunged. Today,
however, banks hold much smaller amounts of stocks, and I do not anticipate a major
impact on the overall soundness of the banking system. That said, we will closely monitor
effects through various channels, including the effects through losses at overseas investment

funds arising from unexpected market movements.

II. Monetary Policy

We looked at the baseline scenario of a waning pass-through of the past import price hike,
an emerging virtuous cycle between wages and prices, and the underlying inflation rate
gradually moving up toward the target rate of 2 percent. We also looked at several risk

scenarios.

What should monetary policy do to realize the baseline scenario? The Bank is currently
working on two areas: the unwinding of the unconventional measures that have been in

place for many years, and adjustment to the short-term policy interest rate.

Reviewing the Experience with Unconventional Policy

Following the collapse of the asset price bubbles in the early 1990s and the financial crisis
later in the decade, the traditional approach of raising and lowering the short-term interest
rate within a positive range had become insufficient in addressing an economic slowdown

or deflation.

For this reason, the Bank of Japan became the first central bank in the world to introduce an
unconventional monetary policy in 1999, and has since added many more policy tools.
While many other central banks rescinded their unconventional monetary policies in 2022,
the Bank of Japan maintained its policy until this March. It carried out unconventional
monetary policy for the longest period and with the widest range of measures in the world
(Chart 7).

Since April 2023, the Bank has been reviewing Japan's experience with unconventional
tools from a variety of perspectives. Empirical analyses conducted by the Bank's staff and
by researchers at home and abroad generally confirmed certain levels of effectiveness

unconventional policies had in supporting economic activity and prices.

Unconventional measures had side effects as well, including on the behavior of financial
institutions and the functioning of financial markets. Moreover, some argue that the
experience overseas suggests that some of the unconventional measures can cause policy

shifts to be behind the curve or create excessive market volatility in the exit phase.

In conducting the review, the Bank has posted on its website papers on a wide range of
issues written by its staff.? It also held conferences with researchers and practitioners from
home and abroad. The Bank plans to publish the summary results of the review by the end

of the year. After all the efforts, however, there are issues which still remain unresolved.

One example is the issue of the long-term effects of the extended period of strong monetary

easing on productivity. Some argue that this would distort resource allocation and push

3 For the review of monetary policy from a broad perspective, please refer to the following link:
https://www.boj.or.jp/en/mopo/outline/bpreview/index.htm.

down productivity, while others maintain that it would have positive effects on productivity,
such as through the accumulation of human capital. Empirical analysis on this issue has not

progressed well enough, and further work may be warranted.

Another example is issues surrounding the transmission channels of unconventional

monetary policy.

Before I joined the Bank, I imagined that the main transmission channel of monetary easing
was the lowering of funding costs, which makes it easier for households and firms to

borrow funds to spend and invest.

However, an assessment carried out by the Bank in 2021 found that various monetary
policy measures taken after the policy interest rate reached zero boosted the economy not
just by lowering funding costs but also significantly by affecting stock prices and exchange
rates. Moreover, given that the majority of the increase in lending volume was related to
real estate, it is likely that the impact from funding costs was closely related to the
stabilization of land prices and the rise in condominium prices during the period. The study
does not cover the period when the Bank raised and lowered the interest rate within a
positive range, but, for the period facing the zero lower bound, changes in asset prices, such
as stock prices, exchange rates, and real estate prices, seem to have had a significant role in

the monetary policy transmission.

The key function of the asset markets is selecting viable projects and allocating resources to
them, and the future of the economy depends on how well they carry out that role. If the key
transmission channels of monetary easing under the zero lower bound include pushing the
asset markets in a certain direction, the implications monetary easing has on the efficiency
of resource allocation and long-term growth potential may depend on the asset price context

in which monetary policy operates.
For instance, let us look at the asset price context in 2012, the year before quantitative and

qualitative monetary easing (QQE) began. The Nikkei 225 Stock Average declined to 8,239

yen, the yen appreciated to 76 yen per dollar, and land prices were declining nationwide,

10

including in the 23 wards of Tokyo. The large-scale monetary easing that began in 2013

may have had the side benefit of helping to correct this rather extraordinary situation.

Since then, the asset price context in which monetary policy operates has evolved. Has the
evolving context affected the implication of monetary easing? To answer this, further study

on the relationship between asset prices and monetary policy may be warranted.

Some questions on the effectiveness and side effects of unconventional tools are reasonably
well answered, but others are not yet. Nevertheless, I believe there is already a consensus in
Japan and abroad that central banks should have unconventional tools in their toolbox to be
prepared for the time when traditional tools reach their limits, but that they do not need to

mobilize unconventional tools so long as traditional tools can do their job.

Conduct of Monetary Policy

This March, judging that it was within sight that the price stability target of 2 percent would
be achieved in a sustainable and stable manner, and that the unconventional measures had
fulfilled their roles, the Bank discontinued the negative interest rate policy and other
unconventional measures. In July, it published a plan to reduce its purchase amount of
Japanese government bonds (JGBs) in a predictable manner, to ensure that long-term
interest rates would be formed more freely in financial markets (Chart 8). These decisions
have made it clear that the Bank's primary policy tool will be the traditional tool of guiding

the short-term interest rate.

At the July Monetary Policy Meeting (MPM), the Bank confirmed that Japan's economic
activity and prices had been developing generally in line with its outlook, and raised the
policy interest rate, the primary policy tool, from around 0-0.1 percent to around 0.25
percent (Chart 9). In its policy statement following the meeting, the Bank expressed that
"real interest rates are expected to remain significantly negative after the change in the
policy interest rate, and accommodative financial conditions will continue to firmly support

economic activity."

11

Currently, the financial and capital markets remain unstable, and the Bank needs to monitor
their developments with the utmost vigilance. The Bank also intends to carefully examine
the impact these market developments at home and abroad have on the outlook for
economic activity and prices, the risks surrounding the outlook, and the degree of

confidence in the outlook.

The Bank's basic stance on the future conduct of monetary policy is that it will examine the
impact of market developments and the July rate hike and that, if it has growing confidence
that its outlook for economic activity and prices will be realized, it will adjust the degree of

monetary accommodation.

The Bank will conduct monetary policy as appropriate to achieve the 2 percent price
stability target in a sustainable and stable manner while closely communicating with market

participants and other stakeholders.

Neutral Rate of Interest

Assuming that the economy and prices just continue to develop in line with the Bank's
outlook, what will be the terminal policy rate? This is a question we are often asked. If the
economy is growing at cruising speed and prices are in line with the price stability target,
there would be no need to accelerate or curb the economy. Then the policy rate could be set
at a level that is neither accommodative nor restrictive. Economists call this level the neutral
rate of interest and have developed a range of economic models to estimate it. The Bank's
staff have tried various approaches, including those that they developed themselves, to

estimate the rate for Japan.

The neutral rate of interest is a valuable concept that helps us clarify our thinking. Some,
however, even go so far as to imagine that a central bank sets the terminal policy rate at the
estimated level of the neutral rate and infers the policy trajectory working backward from

there. I do not think such an approach will work so well.

Can a central bank set the terminal policy rate at the estimated level of the neutral rate?

Estimation approaches give different outcomes, and each outcome comes with an estimation

12

range. It is therefore impossible to pinpoint one specific number as the definitive answer.
Furthermore, in Japan's case, the short-term interest rate has been almost zero for the past
30 years. Whether estimates based on the data from the period can tell the reaction of the

economy to positive rate changes is an issue we should be especially cautious of.

Can a central bank infer the policy trajectory working backward from the neutral rate? The
economy is subject to various shocks and is constantly transiting from one state of
imbalance to another. The trajectory toward a steady state cannot be a straight line and

should be changing all the time.

Moreover, even in situations where the policy interest rate is at the level of the neutral rate,
the behavior of firms, households, and financial institutions could differ depending on
whether the policy rate reached that level as a result of rate hikes or cuts, and on how
rapidly the rate was raised or cut. A linear economic model often fails to describe path
dependencies, but the outcome in the real world often depends on the timing and sequence
of policy actions. It may also be that, while economic agents do not react to an interest rate

change within a certain range, they have material reactions beyond certain thresholds.

In any case, estimation of the neutral rate of interest would not automatically show the right
policy path for Japan, at least at the moment. I believe that the Bank should continue its
efforts to refine its approaches to estimate the neutral rate for Japan and use the results as a
useful point of reference. I suppose, however, the Bank has no other choice than to chart a
way forward examining how the economy and prices respond as it conducts monetary

policy.

Conclusion

Bewildered by the pace of changes in the world and feeling more squeezed day by day, we
tend to become myopic and focus only on immediate tasks. The flood control system
Takeda Shingen built 460 years ago in this region seems to signify an opposite attitude
(Chart 10).

13

The power of the rapids of the Midai River was first diverted by a wall of stones, then
divided in two by a wedge-like embankment, and held back by 16 rocks Shingen put in
place and by a pre-existing high cliff. Five more dikes were built, so that even if the water
overflowed, it would flow back into the river through the gaps between the dikes. Perhaps
the design of the whole system resembles the way Shingen placed his troops in different
parts of the battlefield taking advantage of existing rivers, cliffs, and other natural
conditions. I imagine that his flood control system and military strategy both shared

resilience-oriented thinking and preparedness for contingencies and unexpected scenarios.

Today, I talked about one baseline scenario and two risk scenarios. All of them just
extrapolate the past and none of them involve unexpected elements. In designing the future
of the regional and national economies, however, we may have a lot to learn from our

predecessors who seem to have known how to think more strategically.
Thank you for your attention. Now I would like to open the floor and would appreciate it if

you could share your views, not only on the topics I have mentioned, but more widely on

the issues that you currently face and work on.

14

Japan's Economy and Monetary Policy

Speech at a Meeting with Local Leaders in Yamanashi

August 28, 2024

HIMINO Ryozo
Deputy Governor of the Bank of Japan

Introduction

I. Economic Activity and Prices

Comparison with the United States and the Euro Area
Wages and Consumption
II. Monetary Policy

Reviewing the Experience with Unconventional Policy
Conduct of Monetary Policy

Neutral Rate of Interest

Conclusion

I. Economic Activity and Prices Chart 1

The BOJ's Forecasts for Real GDP and the CPI
(July 2024 Outlook Report)

year-on-year % change

4
CPi(all items less -_-_ forecast
3 4 fresh food) >
2 I =
1 7 - --
Real GDP Sn
0
-l 4
2 4
3 4
-4 1 L 1 L L j
19 20 21 22 23 24 25 26

Fiscal year

Note: The forecasts presented are the medians of the Policy Board members' forecasts.
Sources: Cabinet Office; Ministry of Internal Affairs and Communications; Bank of Japan.

I. Economic Activity and Prices Chart 2

Prices and Interest Rates
in Japan, the United States, and the Euro Area

Consumer Prices Short-Term Interest Rates
year-on-year % change %
12 5 6 4
- Japan
10 - United States 5 4 - Japan
- Euro area - United States
8 44 -Euro area
6 3 4
4 2 4
2 1 4
0 0
2 A L 1 L -1 n 1 A L
Jan.20 Jan.21 Jan.22  Jan.23 Jan.24 Jan.20 Jan.21 9 Jan.22. Jan.23_ Jan.24

Note: In the left-hand chart, the latest figures are as of July 2024. Figures for Japan are the CPI for all items less fresh food, while those for the United States and the euro area are the CPI for all items.
In the right-hand chart, the latest figures are averages for August 1-23, 2024. Figures for each economy are as follows: for Japan, the uncollateralized overnight call rate; for the United
States, the effective federal funds rate; for the euro area, €STR.

Sources: Ministry of Internal Affairs and Communications; Bank of Japan; FRB; BLS; ECB.

I. Economic Activity and Prices Chart 3

Import Prices and Self-Sufficiency Rates

in Japan, the United States, and Germany

Energy and Food

Import Prices :
Self-Sufficiency Rates

ear-on-year % change %
60 * » 8 150 4
- Japan
@ Japan
50 + --United States

B United States

49 I --~Germany @ Germany

--- I
30
20
10

50 4

-10

-20
Jan.20 Jan.21  Jan.22) Jan.23 Jan.24 Energy Foods

Note: In the left-hand chart, the latest figures are as of July 2024 for Japan and United States, and as of June 2024 for Germany.
In the right-hand chart, figures for energy are as of 2021, while figures for foods are as of fiscal 2022 for Japan and as of 2020 for United States and Germany.
Sources: Bank of Japan; BEA; Federal Statistical Office of Germany; Agency for Natural Resources and Energy; Ministry of Agriculture, Forestry and Fisheries; Haver. 3

I. Economic Activity and Prices Chart 4

Consumer Prices by Categories
in Japan, the United States, and Germany

Goods Services Housing Rent
end of 2020=100 39 Crd of 2020=100 39 nd of 2020" 100
'I -SJapan
- United States -VJapan -Japan
- Germany - United States
- United States
20 20 4 - Germany 20 4
-- Germany
10 10 +4 10 4
00 00 00 4
90 fi \ fl 90 fl fl 1 90 4 fl 1 f
Jan.21. 9 Jan.22.- Jan.23.- Jan.24 Jan.21 Jan.22. 9 Jan.23- Jan.24 Jan.21 9 Jan.22. Jan.23- Jan.24

Note: The latest figures are as of July 2024. Figures for goods in Japan exclude fresh food.
Figures for services exc