Bloomberg reports that the global fear of a period of sustained inflation has reached the shores of deflation-prone Japan.
The country’s 10-year breakeven rate -- a bond-market derived gauge of inflation expectations over the next decade -- climbed to its highest since 2018. A slump in the yen and surge in commodity prices have fueled the gain and analysts don’t expect it to reverse anytime soon.
An energy price surge that has sent a shockwave through markets is making investors reassess the narrative that post-pandemic price rises are temporary. Longer-dated price expectations are pushing higher in the U.S. and the move in Japan shows even countries that have historically struggled to generate inflation aren’t immune.
Japan’s consumer prices stopped falling in August for the first time in 13 months, ending the country’s longest deflationary stretch since 2011.