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Inflation has been low in Japan for a variety of reasons. One key factor is the country’s demographic trends, which include an aging population and low birth rate. This has led to a decline in the working-age population and a decrease in demand for goods and services, which in turn puts downward pressure on prices.
Additionally, the Bank of Japan has implemented a policy of quantitative easing, which involves injecting large amounts of money into the economy. This has helped to keep interest rates low and stimulate economic growth, but it has not had a significant impact on inflation.
Finally, there is a cultural preference for saving in Japan, which means that households tend to be more frugal and less likely to spend money on non-essential goods and services. All of these factors contribute to the low inflation environment in Japan.
The effects of inflation are often not directly felt but are played out over a long time, especially long-term investments are vulnerable to inflation.
At Horizon65, we created a mobile app that enabled you to check the effect of inflation on your savings.