Friday, July 22, 2005

End of Japanese deflation?

This is old news, but for three months in a row now consumer prices have actually been increasing in Japan. After hitting their post-1997 trough in February, the annualized (NSA) inflation rate since that time has been a dramatic +3.3%, although with seasonal adjustment, the figure is a much more tepid +0.4%.

May also marks the first time since December that Japanese consumer prices have risen year-over-year. Annual inflation currently stands at +0.2%. Yet without skyrocketing oil prices, one suspects even this level of inflation couldn't exist.

6 Comments:

At 11:58 AM, Blogger calmo said...

When to pay attention to NSA stats and when not...I like the SA ones here that show the tepid 0.4% annual increase in the absense of the entire NSA series.
But a trough is a trough no matter how shallow.

Tables 1 and 2 showing the different pictures for Tokyo and Japan both show identical 2.5% decreases in household items, the largest numbers in the table.
So prices on discretionary items tell me that deflation is still alive and well.
The energy costs (but not in Tokyo) and education costs led the inflation forces.

Such a curious category: 'Reading and recreation' -when was the last time anyone bothered to count 'reading' in America?

 
At 1:04 AM, Anonymous Anonymous said...

I read the Japanese popular economics magazines Toyo Keizai and
Ekonomisuto with moderate frequency. Inflation mentality in Japan
has been utterly absent for years. This month's #2 article in
Toyo Keizai describes government plans to raise taxes on the middle class
to such an extent as to significantly impact their retirement saving
plans. Since a frequent topic in these magazines is the ongoing
"pension crisis" (similar in nature to that in the US), this is unlikely
to lead to Japanese workers upping their spending a lot -- at the same time
that they feel an ever stronger need to save, they'll be less able to.

A major factor in this is the government's need to pay down the enormous
national debt accumulated while fighting deflation through high public-works
spending.

jm

 
At 8:05 PM, Blogger bailey said...

Does anyone know the significant differences in methodology for collection & calculation of major economic indicators? What good's comparison of Japanese, German, Chinese, U.S. inflation, productivity, unemployment if they're substantively different? When is the Economic community going to globalize this?

 
At 10:05 AM, Blogger calmo said...

I wonder if bailey is acquainted with the OECD's stats that purport to make international comparisons? And is this methodology robust or should there be one international body that "globalizes" this?
The numbers are generally believed to be less reliable than the US's. The comparisons and conclusions are taken with more than a few grains of salt.

 
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