Deflation battle not over yet

Despite the improving growth outlook in Japan, other challenges — including the battle against inflation — have been a drag on the economy.

“Just because the economy is improving doesn’t mean it will pull the plug on the deflation scenario,” Glassman notes.

Through June 2004, the core consumer price index in Japan was down0.1 percent on a year-over-year basis, compared to 0.8 percent and -1.0 percent year-over-year readings in 2001 and 2002, respectively.