Japan's consumer prices flat as deflation specter looms

Food prices have been surging in recent months, some more than doubling in price. CPI does not reflect the actual state of cost of living, just gives justification for more money printing.

The price of some fruit and vegetables is through the roof because the rainy season was late, or didn't arrive, depending on the location. Hence 300 yen for a lettuce. Supply is down.

We will see more shrinkflation soon too!

Dr Maybe

The price of some fruit and vegetables is through the roof because the rainy season was late, or didn't arrive, depending on the location. Hence 300 yen for a lettuce. Supply is down.

You give me the impression that you don't live here.

The rainy season on the contrary was heavy and longest I can think of with

flooding in several areas of the country.

In some areas it was declared over this month which is very rare.

If you say crops were affected by the heavy rains and flooding I will understand.

Hope the higher prices are really because of the destruction from the rain and floods

and not farmers using it as an excuse to make more money.

Third largest economy? was the second when I got here, my grandkids might live in the fourth or fifth, sixth while paying crippling taxes and told to suck it up. We must all share the burden of baffoons decisions.

fears of a national plunge back into deflation

Fearing that prices are likely to go down, not up?

Drops in gasoline prices reflecting weak global demand for crude oil offset gains in food and household durable goods such as electric rice-cookers and air-conditioners, the data showed.

I feel most economist are really out of touch with what the average person goes through.

Their perspective would change considerably if they were to trade their posh air conditioned office

for an assembly line job in a small or medium sized company as a temp or part timer so they can experience

what it is to leave on 150,000yen or less a month.

Drop in gasoline prices ?, wasn't the price of crude in May -37USD a barrel, that is the oil producers were instead paying for crude to be taken free of charge.

Yet never did the refiners pass on some of the benefits of the free crude they obtained in the form of cheaper

gasoline prices, prices have and are still high.

Deflation "specter"? "Fears" of prices going down?

The only people who want consumer prices to go up are working for the indebted BOJ. The public suffers when inflation attacks their savings and their purchasing power at the supermarket -- and we certainly aren't seeing any deflation there!

Any type of food produced in Japan is just incredibly expensive except for mass produced food like tofu or natto made with imported beans.

When the weather is out of whack then everything just shoots up except for wages which have have been on a constant downward trend...

Time to give Kuroda another raise! Every time he fails (which is every time) they reward him with contract renewals, call him a genius, etc.

Japan is NOT deflating, it is just leveling to were the rest of the world is at.

I have always thought Japan OVER INFLATED SCAM prices will some day level off and match the rest of the world. Looks like COVID - 19 did it.

@Dr Lucifer

If you say crops were affected by the heavy rains and flooding I will understand.

Yes, you're right about that. My mistake. The rains were late, but actually it was the flooding that was the more serious problem.

I guess that what I mostly wanted to say, in response to the first post, was that the current prices of some local produce doesn't have much bearing on overall trends in "core consumer prices". It goes beyond food, in other words.

Every time I read a quote about 'core inflation' that omits the everyday rise in prices for food, I shake my head in disgust. We all have to eat, and food costs are inflating horribly. Blame the weather, blame COVID-19, blame the farmers, blame governments' supply policies that protect farmers (every country has them), it just doesn't matter. Soon enough, we won't be able to afford the simple luxury of food on our tables. And it's not a luxury! Sadly, economists and governments have a problem understanding that.

298 for one Apple.

398 for a head of cabbage

298 for a half rotten head of lettuce, because no one wants to spend 298 for lettuce.

218 for milk.

The list goes on and on, people are worried about the deflation.

Happy to read this. Last thing I need is prices going up.

How can consumer prices go up when the lousy minimum wage will rise by 1 yen - 1 measly yen!

@TrevorPeace

I hear you! Food is basically certain to get more expensive over the coming years. "How bad is the hit going to be?" is probably the main question.

You mention a list of suspects... climate change is at the root of it all, surely, along with the unwillingness of governments to act to tackle the problem. At least most countries have made some feeble steps towards acting (with the Paris Accords), but even that is too much for Trump. Oh no!... the leading world economy won't be part of anything to do with preserving the planet for future generations, not while the morally bankrupt reign of sleaze and incompetence continues in the White House.

Third largest economy? was the second when I got here, my grandkids might live in the fourth or fifth, sixth while paying crippling taxes and told to suck it up. We must all share the burden of baffoons decisions.

Sigh. Of the three dozen most developed nations in the world, those who belong to the OECD Japan's tax burden, meaning tax revenues at all levels of government from all sources as a proportion of GDP is the third or fourth lowest in the OECD, varying a position up or down depending on which year's data you choose. Typically only those paragons of economic growth and prosperity Mexico and Turkey have lower tax burdens than Japan. Japan usually trades third place from the bottom with the US or South Korea year to year. Part of the reason Japan has such a high national debt is that the government under taxes, especially compared to its European competitors who generally have a tax burden that is 10-15% more of their GDPs than Japan (while posing higher productivity rates and higher GDP growth rates than Japan manages).

The "deflation" scare is propagated by bankers - the only people who hate deflation.

Every time I read a quote about 'core inflation' that omits the everyday rise in prices for food, I shake my head in disgust. We all have to eat, and food costs are inflating horribly. Blame the weather, blame COVID-19, blame the farmers, blame governments' supply policies that protect farmers (every country has them), it just doesn't matter. Soon enough, we won't be able to afford the simple luxury of food on our tables. And it's not a luxury! Sadly, economists and governments have a problem understanding that.

Food and energy costs have seasonal changes. Food prices are volatile and change with the seasons. No nation includes food prices in their measure of core inflation. The fact is for Japan, falling demand for oil led to a reduction in fuel prices that offset the rise in prices of some household appliances like electric rice cookers and air conditioners.

Understand also that deflation is highly destructive. Superficially you say, oh goodie prices are falling. In a deflation wages and prices both fall. That means families take home less income and businesses take in less revenue. What does not fall during a deflation is the Yen or Dollar value of any outstanding debt. Most businesses have outstanding debt or a line of credit of some sort and most homeowners owe on a mortgage. What happens as a deflation progresses is that family and business incomes eventually fall to a point where they can no longer pay their basic expenses and make their debt payments. Businesses and homeowners fall into default. Businesses close, employees lose their jobs, and when they default on their mortgages they lose their homes. Apartment owners too can go into bankruptcy and default, leaving tenants in limbo and maybe outdoors. Nobody in economics or anywhere else knows where the bottom is when you have mass bankruptcies across your economy during a full fledged deflationary spiral.

Another consideration, if falling prices become the expectation buyers will tend to put of purchases knowing that if they wait prices will fall further. This accelerates the deflation. Businesses that can't sell at today's price lower their price, but that cuts into revenue. Buyers may chose to keep waiting it out anticipating even lower prices. Sales of everything but the most essential goods can dry up overnight in this situation. Everything about deflation is bad for a nation and why central banks always try to promote low, steady inflation of around 2% per year.

Assets in Japan are overinflated. Rich people don't want deflation to keep their position and prevent the sharing of those assets.

I never heard a Japanese having a second house/flat in the countryside because too expensive/overtaxed.

Prices don't drop enough, and yen should also be much lower.

Newsflash - Japan's economy has been deflationary since the bubble burst in the early 90's - why do you think the MoF has been talking fot the past three decades about stimulating asset inflation? Do your editors actually read what you post, or do they just greenlight everything?

Finally, a poster in touch with reality. You can go into any super market, every product will be the same. Come back in 10 years, same deal. There is no foreign competition and protectionism is, and always will be, in play. Its the Japanese consumer, and the 1 % foreign population, that really suffer.

Another consideration, if falling prices become the expectation buyers will tend to put of purchases knowing that if they wait prices will fall further. This accelerates the deflation. Businesses that can't sell at today's price lower their price, but that cuts into revenue. Buyers may chose to keep waiting it out anticipating even lower prices. Sales of everything but the most essential goods can dry up overnight in this situation. Everything about deflation is bad for a nation and why central banks always try to promote low, steady inflation of around 2% per year.

But this is the same thing that has been posted here for years, and the same tear up the road, pave a new one stimulus project gimmicks will be applied...lol

Nothing changes, but I do salute Abe for trying. His immi reforms was working but COVID knocked them out. The Olympics was another dream of his, but once again COVID....maybe just rename one of the original 3 arrows to "defense spending" and that could be the next gimmick.

Low inflation is an issue with nearly all the other developed economies. It's largely due to globalization, demographics, inequality and technology. Just get used to it.

Assets in Japan are overinflated. Rich people don't want deflation to keep their position and prevent the sharing of those assets.

It is true but not in the favorable way. Japanese assets are expensive in the Yen terms but depreciating in the USD term. The rich people in Japan may be rich with the amount of Yens that they own but they aren't comparable to the outside Asian peers who flash USD in their super cars. The strong Yen makes the ability of accumulating USD, in the way of not creating hyperinflation, much weaker in every year. Japan's exports are expensive and get less USD per selling each year, while China and Vietnam are eating Japanese lunch in exports.

Another issue here is that high value assets in Japan are difficult to liquidate. Most foreign investors do not have any interest in buying Japanese stocks or companies in recent years. The lack of structural reforms and economic liberties is the main reason. The bureaucratic nature of Japan INC hammers the profit margin and dividends severely.

https://www.ft.com/content/ddec7ddf-0fd0-4f03-a692-933e5da3bb61

This is just textbook theory nonsense suits in MoF and BoJ love to keep repeating. Japan has been in a deflation for how many decades since the bubble burst? Consumers don't stop buying houses,cars, appliances, holidays, food etc..businesses don't stop purchasing equipment, materials, supplies, labor etc ... just because they might have an 'expectation' prices will "fall further if they wait". The reality on the ground is different from the sky high bubble most " economic experts" are living in.

Deflation is the Japanese government's desperate solution for the much worse fate: Hyperinflation. Japanese Keynesian neoconservatives chose social stability above any reform for economic growth in the long term. Most Japanese elites and rich people either fled Japan to Singapore/Western world or are planning to flee.

Believe me, Japan definitely does not want any hyperinflation. It was almost on one in 1973-74, the brink of Japanese assets bubble collapse.

https://www.nber.org/papers/w15726#:~:text=Japan%20suffered%20a%20very%20high,the%201973%2D74%20high%20inflation.

Time to give Kuroda another raise! Every time he fails (which is every time) they reward him with contract renewals, call him a genius, etc.

Don't worry. He already has his bonuses, salary compensation and other perks from his American masters in the Wall Streets. Kuroda and LDP cronies have been creating fragile, legal loopholes in the neoliberal fashion to allow American corporate imperialism creeping in. Japan has been ripe for the foreign invasion in the last decades since PM Koizumi aka The Koizumi Revolution that severely weakened Japanese sovereignty.

https://www.japantimes.co.jp/culture/2007/07/08/books/book-reviews/japan-just-a-puppet-of-america

Aside Americans, European and Chinese entities also plunder the Japanese economy as we speak. Nissan and Mitsubishi Motors are on verge of Renault's takeover, and most local Japanese tourist companies plus real estate assets are Chinese-owned mysteriously.

Shinzo Abe, Haruhiko Kuroda, Taro Aso and other LDP cronies will flee Japan after their messes have become too great that no Japanese leader can fix.