• Prices show Japan is gradually shifting from deflation to inflation
  • CPI shows trend is improving little by little
  • Decision on sales tax will be made after final Q2 GDP data

The question of the hike in Japan’s sales tax (the first hike is due in April 2014) is getting increasing attention, and it seems to me the market is getting softened up for the tax rise to proceed as planned.

Without the sales tax hike Japan’s fiscal position wil deteriorate further, With the hike implemented, there are risks to the economic recovery.

Rock, meet hard place.