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With wage inflation locked at zero, this jump in inflation is basically going to mean a real-income loss for Japanese households. Having lived for so long in deflation, people are getting worried and their reaction will be to tighten their purse strings even further.

Hiroshi Shiraishi, an economist for Lehman Brothers. Inflation in Japan is rising at its fastest pace in 15 years, pushing the world’s second-largest economy closer to the brink of stagnation. (The Times, London)

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