Growing demand in Japan points to higher prices

The Bank of Japan says a key measure indicates demand has exceeded supply, potentially pushing prices higher. The output gap has become positive for the first time in three years and nine months.

The central bank estimates the figure for the October-to-December period last year stood at 0.02.

A positive reading means that demand is higher than supply, putting upward pressure on prices.

The BOJ decided last month to end its negative interest rate policy for the first time in 17 years. Policymakers said that their target of stable 2 percent inflation would be achieved.

Analysts are watching how the positive output gap could affect the bank's policies going forward.