From Diamond, JEU selected an essay asserting that Japan's deflation will end this year. And from the Economist, we chose an article discussing how executives in the retailing and wholesale sectors, which are faced with relentless price competition, are coping with further drops in prices. Masahiro Matsuoka, managing director, UBS Warburg Securities, et al. Diamond, February 17, 2001. When retailing executives and others affiliated with the industry explain the reasons for lackluster sales, they often refer to falling prices and appear to believe that prices will keep on dropping.
Deflation actually seems to be bottoming out, though.
For example, a year has already passed since the soaring yen sent import prices tumbling, and the chances are good that prices will halt their skid during fiscal 2001. Also, demand finally appears to be catching up with supply. Personal consumption is unlikely to slide further, and the glut in supply is dwindling. Even though pessimists assert that differences between domestic and overseas prices are shrinking, this, in fact, is not the case. For changes in the economic structure to result in falling prices, Japanese consumers will have to embrace cheaply priced products that are of much lower quality than they have been accustomed to.