Abe’s Inflation Exceeds Merkel’s After 14-Year Lag
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Prime Minister Shinzo Abe’s pledge to halt falling prices has caused bond investors’ expectations for inflation to surpass Germany’s by the most on record, after 14 years in which Japan’s living costs have lagged behind.
The five-year break-even rate in Japan, the difference between yields on inflation-linked bonds and conventional notes, rose to 1.54 percentage points this month and exceeded Germany’s by as much as 33 basis points, the most in data compiled by Bloomberg going back to 2009. This year, Japan’s rate has climbed at the fastest pace globally after that of the U.K.