But I am going to be very annoyed if my salary goes down as well. The local government employee, who, only a few years ago would probably have been dining in a French restaurant rather than resorting to a local noodle stand, is not the only Japanese person pondering the pros and cons of the nation's new deflationary environment. For most of the population, this is a brave new world. While Japan has suffered plunging real estate and share prices for almost a decade now, a legacy of its exploding assets bubble economy in the early 1990s, consumers have long resigned themselves to paying exorbitant costs for goods. The reasons are many.
Japan has the world's most inefficient distribution sector, adding an imposing cost layer.
Prices of many products are rigged artificially high to protect cosseted sectors like agriculture and food production. Competition has been effectively discouraged. And many Japanese, brought up in the postwar economic boom, and with only a limited number of options on which to waste their cash, are price snobs, shunning discounted goods in favour of more expensive brand items. The mindset explains why Tokyo and Osaka are regularly listed as the most expensive cities in the world. But Japan's prolonged economic problems are prompting a big shift in attitudes.