In June of this year, the Bank of Japan introduced a new set of indexes to provide a fuller picture of price levels in Japan, breaking down fluctuations at four intermediate stages of demand, in addition to final demand.

In an article in the September/October issue of Japan Spotlight, Research Director Nobuo Iizuka notes that while year-on-year prices rose by 2.5% in April 2022 as a result of the sharp rise in imported food and energy costs and the rapid depreciation of the yen against the US dollar, this is still quite low compared to the 8% level in many Western countries.

The new BOJ indexes for final and intermediate demand (FD-ID price indexes) suggest that the reason for the more gradual rise in Japan is that the price of services remains low. Trends in service prices may thus prove to be a pivotal factor in determining future movements of consumer prices in Japan.

“New Indicators Emerge for Understanding Transmission of Price Changes,” Japan Spotlight
https://www.jef.or.jp/journal/pdf/245th_Economic_Indicators.pdf

Profile of Research Director Nobuo Iizuka
https://www.tkfd.or.jp/en/experts/detail.php?id=381