Seiji Adachi: Economic activity, prices, and monetary policy in Japan

Speech by Mr Seiji Adachi, Member of the Policy Board of the Bank of Japan, at a meeting with local leaders, Kagawa, 16 October 2024.

The views expressed in this speech are those of the speaker and not the view of the BIS.

I. Economic Activity and Prices

A. Economic Activity

I would like to start my speech by talking about the current situation of Japan's economy.

In my view, while conditions in Japan's economy cannot be regarded as favorable, the economy has been resilient on the whole. To examine this point in detail, let me describe Japan's economic situation from two aspects: the household sector and the corporate sector.

I will start with the household sector. There have been comments that private consumption remains somewhat lackluster (Chart 1). That said, I believe that this can mostly be attributed to weakness in durable goods consumption, which reflects setbacks in automobile production caused by various unexpected incidents. Disregarding this as a temporary factor, I consider that private consumption has generally been following the projected trend. Indeed, in response to price rises, households' thriftiness has intensified in the consumption of food and daily necessities in particular, which resulted in consumption of nondurable goods being on a decreasing trend; for example, some anecdotal information from supermarkets and other stores indicates that household demand has been shifting to lower-priced private-label products. On the other hand, however, services consumption has been viewed as being solid, and business performance in the foodservice industry has been favorable.