A reasonable range of inflation is one of the important indicators to judge the stability of a country’ s macroeconomic development and the balance between supply and demand. The change in age structure of population due to aging will have a long term and important impact on the rate of inflation. Among major developed countries in the world,Japan has the highest degree of population aging, accompanied by long-term economic stagnation and low inflation, which has brought serious social and economic consequences. This paper focuses on the impact of changes in the age structure of Japan’ s population on inflation. Based on the previous theoretical framework and the national characteristics in Japan, the panel data of 47 prefectures in Japan from 1989 to 2019 are analyzed. Results show that the increased proportion of young adults (15-29 years old) and adults (30-44 years old) boosts the inflation, while the increase proportion of middle-aged adults (45-64 years old) and elderly population (65 + years old) increases in Japan has a significant negative impact on inflation. Furthermore, with the implementation of a series of labor market reform policies introduced by Abe government, the labor markets witnessed the increase of elderly population’s labor participation and decreased stability, which results in a significant change of the impact of adults and elderly population on inflation as illustrated by two period data analysis. The negative effect of population aging on inflation has been offset by the increase in the labor force participation rate of the elderly to some extent. At present, China has entered a moderately “aging society”. As a developing country with the largest elderly population, China will face the unprecedented development path of “entering the aging at the low-income stage”. Therefore, it is a realistic choice to deal with China’s population aging policy in the future period by closely focusing on the policy factors thatchange the impact of population age structure on inflation.
