World Economy

Hidden Inflation in Japan

Hidden Inflation  in JapanHidden Inflation  in Japan

If the Bank of Japan’s core price gauge is anything to go by, inflation has all but disappeared. Try telling that to anyone who pays the bills, Bloomberg reported. The general public thinks the cost of living is rising more than twice as fast as the official inflation rate, a survey of consumers by the Bank of Japan shows. So why the gap? Naohito Abe, a professor at Hitotsubashi University, has one possible answer in  an index that captures changes in prices of new products that account for almost half of goods sold at an average retail shop, and often don’t show up in official data. Together with Intage Inc. and the New Supermarket Association of Japan, he’s come up with a measure that also captures the sneaky ways businesses milk consumers -- by reducing the size of a product while charging the same price.