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.
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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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