As the cost of groceries, clothing and electronics have gone up in the U.S., prices in Japan have stayed low. WSJ’s Peter Landers goes shopping in Tokyo to explain why flat prices, though good for your wallet, can be a sign of a slow-growing economy. Photo: Richard B. Levine/Zuma Press; Kim Kyung Hoon/Reuters
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‘Japanification’: As U.S. Inflation Surges, Here’s Why Japan’s Prices Have Held Steady
In recent months, concerns about rising inflation rates have dominated the economic discussions in the United States. With consumer prices surging and wages failing to keep up, many fear that the country might be entering a new era of high inflation. Yet, amid these worries, one country stands out as an anomaly: Japan. Despite decades of struggling with deflationary pressures, Japan has managed to keep its prices remarkably stable. This phenomenon, often referred to as ‘Japanification,’ has intrigued economists around the world.
The term ‘Japanification’ gained popularity in the 1990s when Japan experienced a prolonged period of deflation. The country’s asset bubble burst, leading to a period of economic stagnation, high public debt, and falling consumer prices. Since then, Japan has battled to stimulate its economy and bring inflation to a sustainable level. However, their experiences offer valuable lessons as to why their prices have held steady while other major economies grapple with inflationary pressures.
One key factor contributing to Japan’s stable price levels is its aging population. The country has one of the oldest populations in the world, with a declining birth rate and a large proportion of elderly citizens. An aging population typically consumes less, as older individuals tend to spend less on discretionary items. As a result, overall consumer demand remains relatively stagnant, preventing significant price increases.
Moreover, Japan’s labor market plays a crucial role in maintaining stable prices. The country has a tradition of long-term employment relationships, known as ‘lifetime employment.’ Workers enjoy job security, which means they are less likely to demand higher wages, even during times of inflation. Additionally, the prevalence of part-time employment in Japan helps keep the labor market flexible, allowing companies to adjust to changing economic conditions more effectively.
Japan’s unique corporate culture also contributes to its price stability. Japanese firms prioritize long-term stability over short-term profits, often foregoing price increases to maintain customer loyalty and market share. This approach has traditionally focused on ensuring customer satisfaction and offering high-quality products for competitive prices, rather than maximizing immediate profit margins.
Furthermore, the Bank of Japan’s (BOJ) monetary policy has been instrumental in combating deflationary pressures. The BOJ has pursued aggressive stimulus measures, including near-zero interest rates and large-scale asset purchases, to encourage lending and spending. These measures have helped spur economic activity without leading to significant inflationary pressures.
Lastly, Japan’s experience with deflation has fostered strong deflationary expectations among the population. Consumers have come to expect prices to remain stable or even decrease over time, which creates a self-reinforcing cycle of low inflation. This has a positive impact on the cost of living for individuals and helps to maintain price stability even during periods of economic growth.
While ‘Japanification’ may seem favorable in the context of stable prices, it also presents challenges. Deflation creates its own set of economic problems, including stagnant wages, reduced consumption, and a potential spiral of falling prices. Japan has grappled with these issues for decades, demonstrating that finding a balance between inflation and deflation is vital for a sustainable economic environment.
As the United States faces rising inflation rates and contemplates its long-term implications, studying the factors that contribute to Japan’s stable prices becomes essential. Understanding the impact of demographic changes, labor market structures, corporate culture, and monetary policy can help policymakers navigate the complexities of managing inflation in a rapidly evolving global economy.
There are all types of problems and damage that the phone bust cycle of the West causes that no one talks about. We in the West have to told the lie. That cycles. Are inevitable, but clearly they aren't.
私は日本に住んでいますが、この人たちはひどい嘘をついていると断言できます。 彼らは無視できるほどのインフレであると言うために報酬をもらっているに違いありません…それか、それとも彼らはインフレを感じられないエリート富裕層に違いありません…彼らが私たちが感じている痛みについて嘘をついている間、私たちはここ地上で本当に苦しんでいます…この人たちは誰ですか インフレが存在しないと誰が言ったでしょうか？ ここはきっと何かが間違っている…日本だけでなく世界中で。
I live in Japan and I can say with certainty that these people are lying their scummy heads. They must have been paid to say there is negligible inflation …either that or ithey must be the elite rich that cannot feel inflation….we here on the ground are really suffering whilst they lie about the pain we are feeling….who are these people who say there is no inflation? Something is surely wrong here ..not only in japan but world wide.
just came back from Japan and US. As a normal person, I would rather be staying in japan where things are stable and you barely spot any homeless or walking dead on the street.
基本的に、GDPが大きく成長するのはインフラや建築物への大規模な投資があるときです。戦後の日本は焼け野原だったから色んな建物に投資した。でも現代では十分に開発されています。そのため巨大なプロジェクトは少なく、あったとしても長い時間をかけてゆっくりと進めていくものです。これは戦後にバブルを経験したすべての国が経験することだと思います。日本人が目指すのは大きな成長ではなく、現状維持と、貧富の格差を減らすことです。GDPを上げたいなら廃墟になるビルを大量に作って投資家を誘致すればいいだけです。しかし日本人は無駄な建設を嫌います。
They are horrendously deflationary and the government is trying to hide thwt slowly for the last 20 years
Tesla is a very old company, so that was a bit of a dumb example of a "new company storming onto the car scene". Much more Japan doesn't need electric cars because they excel in public transit and actually have high speed rail. Not having wage increases doesn't matter if prices don't increase, as long as the general population can afford to live a happy lifestyle. This video has failed to show me why stagnant inflation is a bad thing.
Inflation and Growth arent mutually exclusive.
To avoid japanification,increase number of children!
Future consumers and workers.
That means , I’m so genius that I have advice for US,importing millions of immigrants from Latin America and Middle East .
People in other countries don’t believe when I say when I was born, 30 years ago, a can of coke was 100 yen and it’s still 100 yen plus tax which became 110 yen like 15 years ago, and it still stays the same at a vending machine. No one panic buy, no one spends more, no one try to get rid of yen. Some even prefer storing yen at home, rather than banks.
And what about Real Estate prices in Japan are they same for three decades or changed. I was studying Nikkie it has also not risen.
Wouldn’t higher prices result in higher GDP?
Hello from Tokyo. It is hard to believe that prices are stable these days. The rush to raise prices has not stopped. People are struggling everyday to save money.
Confidence in the Japanese government and the Bank of Japan is as stable as Putin's approval ratings.
This is the great thing about a controlled economy. The government and the BOJ can thoroughly postpone problems. The government and BOJ can act as if perpetual motion really exists.
But after those in charge are gone, the time bomb goes off, and those who had nothing to do with the problem are blamed for it.
It is truly a wonderful system for the irresponsible.
Why do WE need growth, when they manage without much in Japan? Sounds more like Wallstreet wanting to feed their Ponzi scheme version of capitalism. I still haven’t met an economist, who can explain to me how you can have everlasting growth in a world with finite resources
It is traditional, ecological, economical and technologically updated and limited as the design of tradition and functions/ features do reconcile making it trial balanced in the balances and entries in the corporation/books of incorporation and industries. /./././././Respectively preserved GDP and features power packed for demographics and statistical output/finalization/Investments-Taxes/years of performance and non performance. Thank you./././././/./ G.M Industries.
just see the big steak an fat american eat and a tiny sushi that a japanese skinny guy eat. Japanese family live in a box apartment the size a american family used to house their car or dogs. An american dog consume and upkeep is more than keeping a japanese alive.
A Indian can buy food in Japan
Curious how they didn't mention how much an employee at McDonald's in Japan versus the United states. They just kind of said the American employees were getting paid more than they previously were and this was a cause of the price increase.
I would rather be in Japan than live in a dangerous country like the U.S.
This is a little outdated. Headline inflation in Japan is 3% now. Core inflation is 2.8%. And core-core is 1.6%. Year over year, August 2021 – August 2022.
tesla hasnt gotten a big part of the market, unless wallstreet is what people consider the market now. Their share of the cars actually bought by folks is tiny.
Shrinkflation.
U.S inflation hit 7% in December, fastest pace since 1982 . Consumer prices in Germany rose by 3.1% in 2021 . France shows a 12 -months inflation rate of 3.4% the highest since September 2008.
yakuza operate in japan inpune transfering corporate money into pedofilic pornography. nothing is done about it. 2 busy sanctioning the russians that DONT want lgbtq in they country. vote for ukraine who want nato in ukraine to force lgbtq on russia.
boycott japan now until yakuza is no longer institution.
「目標を指定してお金が必要」、
Younger generation of Japan is about to experience inflation for the first time. Until now, inflation was something that only exist in book for them.
Bad reporting
Inflation is falsely blown out of proportion because these massive billionaire owned corporations pass all the costs down to the labor force and consumers. Inflation is simply a result of all these large companies like Amazon and Tesla sucking up all the resources and money out of our economy. It’s pitched to us that it’s necessary to have this happen in order to keep up with China and other large economies just like steady population growth is also necessary, but I fail to see how a few thousand greedy people having absurd amounts of money or overpopulation of our planet will have anything to do with outcompeting China. Also they are private companies so they can and do buy, trade, and propagate the Chinese economy. Maybe if they paid their fair share of taxes and absorbed some of the costs of doing business like everyone else inflation would just magically reverse itself.
Did Japan dump trillions of dollars into its economy like we did in the US?
Inflation is due to profits noy wages
INFLATION IS NEVER A GOOD THING! IT SHOULD BE AS LOW AS POSSIBLE
Pick your poison: -3.6% peace of mind or 2.1% sick and dumb society!
This means the economy is really just fine after all. Having highly capitalized industries causes drops in return on capital. Thus prices become stable or falling.
Don't attempt to grow a very mature economy. That is tantamount to cancer. US-based and US-biased economists, politicians and the moronic public love their cancer-like (and cancer-causing!!!) economies!
Japanese 10 years bond was 0% before pandemic thus even after spending $1.1 trillion pumping into their economy during pandemic, BOJ just can't raise rates because they can't pay the interests. Japan is now at the point which they can't pay any rate increase with 260% of their GDP size debt. Better sell all your Japanese Yen holdings and go short. More bad news waiting for Japan with trade war continued with S Korea.
That's the best looking big mac I've ever seen