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STORY: Rate hikes could, finally, be on the way in Japan.

That after figures out Tuesday showed inflation falling less than expected.

At 2%, the gain in the core consumer prices index is exactly in line with the Bank of Japan’s target.

Governor Kazuo Ueda has said he wants to see signs of sustained price rises before moving on rates.

Now the new inflation numbers will fuel bets on spring pay rises at big firms - and suggest Ueda’s conditions are about to be met.

Economists say a rate increase could even come next month, though one told Reuters that April was still the more likely moment.

While inflation is seen as a scourge in most places, Japan has for decades been beset by deflation.

That has sapped consumer spending, and left growth to sputter.

BMO Family Office investment chief Carol Schleif says rising prices are now among the signs that the cycle could be broken:

“You’ve got some shifting demographics, you’ve got inflation for the first time in a generation and a half. I heard one Japanese father talking about being hopeful that his children could, for the first time in their careers, see increases in their base wages, that they haven’t seen for some thirty-odd years.”

Clues to whether that is true could come as early as mid-March.

That is when Japanese firms are due to start talks with labor unions over new pay agreements.

Workers, investors and the Bank of Japan will all be watching very carefully.