Here's an article from the WSJ about inflation worries in Japan.
"For most of the past decade, Japan's biggest economic problem has been falling prices that put a brake on business activity. Even though consumer prices started rising last year, and the government last week removed the word "deflation" from a key part of its monthly economic report for the first time in five years, prices at the retail level are barely budging. The Japanese central bank is forecasting year-to-year increases of just 0.8% through the end of next year.
Still, some economists are starting to worry inflation could escalate faster than expected, prompting a jump in interest rates that could reverberate around the world.
That forecast is based on Japan's fast-changing job market. After years of restructuring, when work forces were pared to the bone, Japanese corporations are expanding quickly to meet rising demand.
Companies are struggling to find enough workers. Japan's unemployment rate was 4% in May, the lowest level in eight years. And demographic change will likely worsen the labor shortage: Japan's falling birth rate means fewer young people are entering the work force. Next year, the first of Japan's postwar baby boomers will retire, reducing the labor force further."
Inflation in Japan is something that no one has worried about anytime in the last 15 years or so. It just goes to prove, once again, that inflation is everywhere and always a monetary phenomenon. If a central bank prints more fiat currency than is needed to support the natural growth of the economy (and how exactly is a central banker supposed to figure out how much is enough but not too much?), inflation will be the result. This article proposes several reasons for the inflation worries, such as a shortage of workers due to demographic changes, but the answer is simpler; the BOJ has been printing too many yen. Read the rest (subscription required)