Demand Exceeds Supply in Japan for First Time Since 2008

Demand surpassed supply in Japan for the first time in six years, adding to inflationary pressure in the world’s third-biggest economy.

The Bank of Japan’s measure swung to 0.6 percent in the first quarter from negative readings back as far as 2008, an official said today in Tokyo.

The change followed six straight quarters of economic growth that closed a shortfall between demand and supply that had put downward pressure on prices. BOJ Governor Haruhiko Kuroda has said he expects the elimination of this output gap, together with rising inflation expectations, to help drive consumer price gains toward the central bank’s 2 percent target.

“The improvement in the output gap will continue with a moderate recovery in Japan’s economy,” said Yuichi Kodama, chief economist at Meiji Yasuda Life Insurance Co. in Tokyo. “Still, we don’t know yet if that will lead the way to stable inflation, given lackluster growth in wages. Companies are still cautious.”

To contact the reporters on this story: Toru Fujioka in Tokyo at tfujioka1@bloomberg.net; Masahiro Hidaka in Tokyo at mhidaka@bloomberg.net

To contact the editors responsible for this story: Brett Miller at bmiller30@bloomberg.net Arran Scott

Press spacebar to pause and continue. Press esc to stop.

Bloomberg reserves the right to remove comments but is under no obligation to do so, or to explain individual moderation decisions.

Please enable JavaScript to view the comments powered by Disqus.