Bank of Japan

Japan logged 10,425 corporate failures in the year to March 2026, the second year running above ten thousand. Read the headline on its own and the story tells itself: the small-firm sector is finally cracking. The same dataset says something stranger underneath. Total liabilities came to ¥1.55trn, down for a second year from ¥2.25trn, and failures of firms with under ¥50m of liabilities made up 62.1 per cent of the count, a record in data back to fiscal 2000 (Teikoku Databank). The number of failures is climbing while the money involved shrinks. The two point opposite ways. ...

Between 1995 and 2021, Japan’s average annual inflation rate was approximately 0.2%. For an entire generation, prices were essentially flat or falling. The condition was far from neutral. Deflation corroded the economy from the inside, suppressing wages, discouraging investment, rewarding cash hoarding and keeping equity valuations perpetually depressed. That era is over. As of December 2025, Japan’s core consumer price index (excluding fresh food but including energy) had remained above the Bank of Japan’s 2% target for 45 consecutive months. The headline CPI averaged 3.2% for calendar year 2025, according to Japan’s Statistics Bureau. Even the “core-core” measure excluding both food and energy, the closest proxy for domestically generated inflation, has been running above 2% for over three years. ...