Prices explode in Japan as the economy flows, and the government appears to be defending to keep up with it. Inflation is the destruction of the records, the growth declines, and the people stuck in the middle of both.
According to Bloomberg analysts, the country has officially slid into stagnation, a bad mix of increased costs and slow production that has not reached this difficulty for decades.
The price of rice increased by 98.4 % on an annual basis in April, the fastest increase since 1971, after an increase of 92.1 % in the previous month. Meanwhile, energy costs increased by 9.3 %, after gradually eliminated government subsidies for gas and electricity in March.
Inflation acquires speed while growth shrinks
The consumer price index, with the exception of fresh foods, jumped by 3.5 % compared to last year, increasing from 3.2 % in March. This is inflation in the fifth consecutive month remaining above 3 %. But while everything becomes more expensive, the economy is shrinking.
Japan’s gross domestic product decreased by 0.7 % in the first quarter of 2025, the first decrease since early 2024. On an annual basis, the economy slipped by 0.3 %, based on moderate estimates by economists.
This slide shows cracks formed even before the US tariff measures begin completely. “Japan has its own recession. Consumer spending is not strong enough to support mild recovery in general,” said Toro Adushi, an economist. And with numbers like this, there is no healing on the horizon yet.
Pressure also strikes politics. Prime Minister Shigro Ishiba, who took office in October, witnessed his approval of his lowest level.
Acute inflation has made everything worse for him as he goes to the summer parliament elections. Only bad economic printing will push the ruling party closer to offering a new motivation package, many of which are already whispering within Tokyo.
Commercial conversations do not move at the speed that should
Meanwhile, President Donald Trump’s tariff raises serious fears in Japan, and relief does not seem close. On May 9, Trade Minister Howard Lootnick said that deals with Japan and South Korea “take much longer” than Trump earlier this month with the United Kingdom.
“You must spend a tremendous time with Japan, South Korea. These are not quick deals,” Harad He said In an interview with Bloomberg TV. His comments showed that Japan should not expect quick help while it is already stuck in the increased price control and low production.
Howard also brought India, saying that the country “is truly difficult” and may be in a queue in a deal. But it will not be easy. “When you talk about India, it is possible that 7000 lines” is one of the definitions that must be modified under a possible agreement. He added: “It takes time, and it takes work – so give us a chance, do not pay and rush.”
Now, Japan has no time. It has been dealing with an economy that has already had six cramps since 2021, while the United States had only two during the same period. The possible growth rate, which is estimated at 0.6 % by the Cabinet Office, is the lowest in the G7. This means that small shocks – such as losing support or confronting definitions – can send everything to a whirlpool.
Segie Cink, another economist, frankly put him: “Of course a great danger is created by Trump, one person. So the outlook can turn greatly if you change his opinion. But it is difficult to be optimistic about the economy at the present time and I cannot deny the chance of stagnation.”
It is not only about Japan. Some analysts are now concerned that the Trump tariff strategy can start the global recession cycle and suffocate growth while pumping prices. Japan, already deep, can be the first sign of what will come elsewhere.
Howard, who is trying to rotate some optimism, said the initial deals that were made with other countries can help work as templates for the rest. “We are trying to show people a framework for how to do business so that we can roll more quickly, right?” He said.
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