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Japan's Weak GDP Belies Progress in Deflation Battle

Hints of inflation in Japan's GDP data
Japan's Prime Minister Shinzo Abe
Kiyoshi Ota/Bloomberg

A look beyond the disappointing headline numbers showing Japan crawled out of recession last quarter reveals signs that policy makers may be making progress in vanquishing deflation.

For the first time since 1997, growth was higher last year before adjusting for price changes than after. In terms used by economists, the expansion in nominal GDP exceeded real GDP, signaling higher prices inflated the world's third-biggest economy.