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'Japanification’: As U.S. Inflation Surges, Here’s Why Japan’s Prices Have Held Steady | WSJ - YouTube
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(pensive music)
(coins clanging)
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- [Peter] Whether you're buying a ticket
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for the subway.
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(speaking in foreign language)
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- Stopping by McDonald's for lunch.
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Or shopping for a computer,
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the prices of these things
don't change much in Japan
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but in the US, they're going up,
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and inflation hit a
three-decade high in October.
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Whereas in Japan, inflation is about zero,
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and has been that way for nearly 30 years.
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In fact, there have been periods
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when prices were actually
falling, deflation.
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So we went shopping around Tokyo
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to see how low prices that may seem great
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for our wallets could actually be one sign
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of a less dynamic and
slow-growing economy.
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(pensive music)
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If you wanna buy electronics in Tokyo,
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this is the place to be,
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and coming to Akihabara
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is also a good place to compare prices
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with the US, and see how Japan is dealing
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with inflationary pressure differently.
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In the US, the price
of computers jumped 8%
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in the month of October
compared to a year earlier,
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whereas in Japan, prices
of these Notebook computers
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actually fell a little more than 1%.
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And one of the reasons for
that big difference is demand.
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As the US has begin to
recover, at least economically,
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from the pandemic,
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there's been an upsurge of demand,
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the US has seen a lot of
supply chain pressures,
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including shortages of
parts and materials,
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like semiconductors that
go into so many products,
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including electronics.
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And also, container ships
have been blocked at ports,
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such as Los Angeles and Long Beach.
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So they're backed up, and
that means a shortage,
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and in some cases, it means retailers feel
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that they can or must raise prices.
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Japan faces many of the
same supply chain problems
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as the US does but in general,
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it has not resulted in
price increases in Japan.
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One reason is that
consumer demand in general
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is not strong in Japan, and hasn't been.
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And that's part of the inflation story
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that Japan has never really experienced
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what we see in the US right now.
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But companies in the US found it hard
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to meet that higher consumer demand
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because they aren't able
to find enough workers.
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So that's driving them to boost salaries
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to recruit workers
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and the cost then is
passed on as higher prices.
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And you can see that happening
on a menu at McDonald's.
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(speaking in foreign language)
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- Here in Tokyo, a Big Mac
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was the equivalent of about $3.40.
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In the US, they're actually
raising prices at McDonald's,
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and according to the company,
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that's largely because of wage increases.
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McDonald's said wages have gone up
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at least 10% so far this
year at US restaurants.
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And a survey finds that companies
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in the US are setting
aside an average 3.9%
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of total payroll for
wage increases next year,
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the most since 2008.
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In Japan, we just haven't see
that wage price cycle develop.
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One reason that wages
tend to rise more slowly
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in Japan is because of a
more rigid labor force.
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People are staying at
companies for a very long time
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and they really don't have the flexibility
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to switch jobs without
great personal loss.
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So companies are not really under pressure
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to offer these people wage increases.
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Because wages don't go up here,
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people aren't willing to
open up their wallets.
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One survey by the Bank of Japan found
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that about half of people
think of price first
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when making a purchase,
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and they tend to reject any retailer
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that raises prices.
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Companies have found they're better off
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keeping their prices level.
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(coins clanging)
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So for example, train
ticket prices in Japan
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haven't gone up that much
for the last 30 years.
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Whereas in the US, the minimum fare
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on the New York Subway
has more than doubled
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over the same period.
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(coins clanging)
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Besides train tickets,
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you see flat prices really
all across the economy.
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For example, Eon, which is
one Japan's biggest retailers
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putting signs in its stores
saying prices frozen!
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At least until the end of the year.
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Prices that don't change very much
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can be reflective of a society
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that doesn't change very much.
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And that could be a good
thing or a bad thing,
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depending on your perspective.
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Japan is still a pretty vibrant place.
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It's a stable society,
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it has kept its unemployment rate low
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but it tends to be accompanied
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by other phenomena that
are not so favorable,
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such as static wages, such as an economy
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that seems to lack some of the dynamism
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of the US where you have
a new company like Tesla
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storming onto the scene
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and seizing a big part
of a market like cars.
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You can see some of that recently
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in growth figures.
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Japan's GDP shrank at
an annual pace of 3.6%
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in the third quarter,
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whereas in the US, the
figure was 2.1% growth.
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Low prices and prices that never go up
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may sound like a good thing
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but they can also reflect
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larger economic problems in a country.
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(pensive music)
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