[Japan’s Economy in the 2% Inflation Era] Takaichi administration emphasizes real income and productivity, while BOJ rate hikes become a focus as corporate prices rise 7.1%

While wage increases are reported to have exceeded 5%, rising prices are weighing on household finances, and the balance between growth investment and interest-rate normalization is attracting attention as a valuation criterion for Japanese equities. Japan’s economy is said to be aiming to reach a 2% inflation rate, with improvements in household purchasing power and corporate productivity viewed as important.

The administration has emphasized a policy stance focused on improving real income and productivity. The response to rising corporate prices and the resulting inflationary pressure is expected to be a focus of policy management going forward.