I'm Down! Campbell's Soup Japan Inflation/Deflation/Depression Index Pt. 2

Is Japan in a deflationary depression? Is Japan headed for massive inflation due to the easy money policies of the Japanese government and Bank of Japan? Have the policies of these two entities set-up Japan for hyper-inflation or a yen crash?

THE BEATLES - I'M DOWN

These are the questions that so many ask, myself included, yet no one seems to know the answers.

So I set up my own Campbell's Soup Japan Inflation/Deflation/Depression Index. This is installment part two. You can read part one here.


What in tarnation is going on here? The price of Campbell's Soup and the price of eggs is crashing.

Here are cans of Campbell's Soup on Feb. 18, 2011 

at about ¥169 a can (about $2.03 USD)

What's this?! Campbell's Soup on March 2, 2011 at ¥134

a can (that's about $1.61 can)

Well if that doesn't ring your bell, how about this egg price? 

Eggs at ¥139 on Feb. 18, 2011 (about $1.68 USD)

The very same eggs for ¥129 on March 2, 2011. (about $1.57 USD)

This shows some real radical drops in price for food, but gasoline has gone from ¥128 yen per liter in this time to ¥138 yen per liter so you be the judge.

Is Japan hitting deflation or inflation?

Other readers in Japan, please comment on your experiences (also tell us where the best places to buy stuff is!)

These prices suggest deflation. Which makes me happy. Who isn't happy when prices go down? 

Campbell's Soup Japan Inflation/Deflation/Depression Index

Is Japan headed for a Yen crash? Is Japan in a deflationary depression? Due to massive easy money policies and Yen printing, has the Japanese government set-up Japan for hyper-inflation?

These are the questions that so many ask, myself included, yet no one seems to know the answers.

There are many gauges of prices that the government uses to measure inflation. But the government often changes these metrics to fit their political purposes.

It looks like Japan has been in deflation over these past 15 years, but if we only looked at gasoline prices, you wouldn't think so. A liter of regular gasoline was about ¥92 yen in 1999. Today it is ¥136 yen per liter.

Many things have gone up in price. Some things have gone down in price. So, here is my "Depression food" index. I'll shall call it, from now on, the Campbell's Soup Japan Inflation/Deflation/Depression Index. I will go to OK Store in Yoga and, photograph these cans everytime I see them and date the photo. From here, we can use this one item to judge:

Is Japan really as scr*wed as people think we are?

Campbell's Soup Japan Inflation/Deflation/Depression Index

Feb. 18, 2011 about ¥169 a can (about $2.03 USD)

Rules: All items will be priced in Japanese Yen. I will give you the dollar price also, but that doesn't really count for my Campbell's Soup Japan Inflation/Deflation/Depression Index as Japanese people will be paying in yen. I also do not want that to be prominent as this chart does not take into effect the dollar/yen rate as that situation is too fluid. 

This is merely a representation of what the average Japanese housewife sees when she buys this product. I may add milk and eggs in the next installment. I will not add rice as the price of rice is controlled by the government.

This page will be updated and posted every time there is a price change to Campbell's Soup or my other target items. 

Stay tuned  to this blog for more economic news and excitement about money in Japan and, er, where was I? Oh, yeah, I was.... ZZZzzzzzz.................. Snork! ........ZZZZZZzzzzzzzzzzzz.......................

¥10 Yen Shops in Japan! Proof of Deflation!

The Asia Times Online shows what 20 years of Japan's economic policies have brought us: Severe deflation.

Now, we have ¥10 yen shops selling daily items and doing brisk business in Japan. Ten yen is about 8 cents. The ¥10 yen shops sell loss leader items to attract the customers but the other items sell for about ¥88 each, so they even beat out the ¥100 yen shops.

¥10 yen shop in Yoyogi in Tokyo!

The store that accomplishes all of this is called the Recycle Garden and you can see their webpage here. 

As the Asia Times Online reports:

At Recycle Garden, 10 yen buys the customer everyday items such as chopsticks, kitchen goods, nail-scissors, hand sanitizers, or air fresheners. A colored plastic hair clasp is also

10 yen. In the Kawasaki shop alone, the product lineup consists of about 1,000 items at 10 yen, with the number of goods totaling around 30,000. It's all there. 

Surprisingly, most of those products are made in Japan, not in China, Vietnam or Cambodia, from where usually cheaper and lower-quality goods flow into Japan.


How does Recycle Garden achieve these super low prices? Interestingly, they buy up goods from bankrupt shops and other bankrupt ¥100 stores!


The article continues:


The mechanism is this: amid an increasingly fierce pricing war among neighborhood retail shops such as 100-yen convenience stores, Recycle Garden makes bulk purchases of those goods from bankrupt shops and firms as from deceased manufacturing and wholesale merchants. In most cases, on hearing the news about a bankruptcy, Recycle Garden workers dash to the failed firms with large dump trucks, and buy up and take away immediately to their chain store a vast amount of goods.

"We are cutting prices to the bone," said Tadafumi Fukuda, 41, manager at Recycle Garden's Kawasaki outlet. "Since we also sell other items at 88 yen and above, 10-yen goods serve as a crowd puller." The number of customers visiting the shop has increased 20% from a year ago, when the shop started to sell 10-yen goods, he said. 


Of course, if the economy were good, then they could never do this business plan of cannibalising other discount shops, but as long as the Japanese government keeps up with the stupid policies that we've had over these past twenty years, then it certainly won't be just, "Japan's Two Lost Decades" It will certainly turn into, "Japan's Lost Three Decades."  


--------

Keywords:  ¥10 yen shop,  ¥100 yen shop, deflation, Recycle Garden, Marketing Japan, Mike Rogers, Mike in Tokyo Rogers

Marketing Japan: Japan is Headed for Third World Status

By Mike in Tokyo Rogers

The big news is about Japan's public debt. Even the older Japanese people have become worried. This has led to many problems that include poor old people not reporting to the government that relatives have died so that they can continue to collect on government pensions. I wrote about that here.

This problem with spiraling public debt in Japan is nothing new, but what is new is the perception of the Japanese themselves. There seems to be a growing realization among the average Japanese that serious trouble is around the corner and that preparations must be made.

I knew that something had seriously changed the day that my father-in-law asked me where he could buy physical gold! This from a very conservative Japanese government supporting former company president. I recommended buying gold in Tokyo from here.

From the recent news, and things that I am seeing with my own eyes, I am getting the impression that people here are getting nervous. Considering Japanese politics and how they are consistently in a state of inertia (except when it comes to spending money, raising taxes or sending our "defense forces" off to somewhere halfway around the world) then I think we are in big trouble and I think it is coming soon.

One thing that really set off this train of thinking in my mind was a visit to Shibuya the other day. It was the first time I had been to Shibuya in quite a while. I had to wait for a business associate in front of the station. Oh, how things have changed in Shibuya over these last 30 years.

I looked out across from the police box in front of the station at Hachiko and then it dawned on me: Urban decay. The place was starting to fall apart. It was dirty, the tiles on the street were crumbling and in need of repair, there was trash on the streets, and it was the kind of dirty that reminded me of downtown Los Angeles.

Forgive my rose-colored glasses, but Japan is not supposed to look like downtown Los Angeles or Thailand or Hong Kong...

No disrespect for Thailand or Hong Kong, I love those places, but looking out from in front of Shibuya
station, I couldn't tell if I were in Japan or some south eastern asian country! This might not seem a shock to you, but remember that this is the #2 or #3 economy in the world... It should not look at all like some broken down third-world nation.

I wrote in 2005 how America had become a third-world nation. It was the #2 most read article for the entire year on Lew Rockwell... It got me a ton of hate mail and even death threats...

No one complains about that article anymore. It is a given. Japan is now definitely headed in that direction. Unfortunately, I think that is a given also.

Tiles on the sidewalk to help the seeing impaired - this is what they are supposed to look like. 

The ones I saw were crumbling, ripped up and completely missing in some places.

The kicker for me was the tiles placed on the ground for the sight-impaired. They were ripped up and - not just in need of repair - they all needed to be completely replaced!

Notwithstanding my basic policy of being against any government spending for anything (especially social welfare or the mlitary); I did not make policy in this country. The policy has created a huge government bureaucracy and a social welfare system. It was designed to bloat the government but also to take care of the unfortunate and down-trodden.... If that is the policy, then what kind of a country doesn't have to money to take care of the most basic needs of the most unfortunate among us? What are we taxed to death for?

And this situation was painfully visible in Shibuya no less. Shibuya!? One of the most famous shopping and entertainment districts in the world for young people. A name synonymous with fun, shopping, spending and fashion... and it now looks like a rundown dump.

Here's an article from the Australian newspaper that supports what I say, though on a bigger scale.

Economists will blame the deflation trap and misguided fiscal spending. Political analysts will blame parliamentary deadlock and vested interests. Investors will blame over-engineering and timidity. The simpler version is that Japan has ceded its status as the world's second-biggest economy to China because it lost interest in keeping it. The farcical domino-run of six prime ministers in five years marked a haemorrhaging of national gravitas that few other electorates would tolerate. Even if Japan as a whole were hungry enough to give China a battle for the second-place spot, it has nobody willing to channel that energy.

Japan! How could this have happened?

----

Keywords: marketing Japan, Third World, Shibuya, Mike Rogers, deflation, Mike in Tokyo Rogers,

Marketing Japan: Does Japan Suffer From Deflation? No.

By Mike in Tokyo Rogers

You know the old saying, "When your neighbor loses his job, it's a recession. When you lose your job, it's a depression."

I've been asked by a lot of people the question, "Is Japan suffering from Deflation?" Now, I'm not an economist and, in this particular blog commentary, I am not concerned here with money exchange rates, I am only concerned with the prices I pay for common goods out of my pocket.

I have been self-employed and working basically out of my home office since 1992. I do most of the grocery shopping so my data is not corrupted with tricks that government economists use to further their aims. Mine is decided using just a few things that people need for everyday living. From this, I can honestly say that my gut feeling, and from what I have seen as a common consumer, is that we are not suffering from deflation in Japan.

How do I come to these conclusions?

Let me use two specific examples that I often cite: Gasoline and the price of canned food. I am aware of what these prices were exactly in the dates I mention because, as a self-employed person, we keep strict records on all expenses at our home and office.

Gasoline and the price of fuel has something to do with everything we touch. It is important for growing food, industry and daily life. You name it, fuel has something to do with it and the price of all goods we need to live in today's world.  In the early 1990's, just as the Japanese economic bubble was bursting, the price of regular gasoline per liter was about ¥95 yen per liter. Today, August 15, 2010, it is ¥124 yen per liter. That's about a 31% price increase. That's from Shell Gasoline station where I always buy.

Canned Corn. My son loves canned corn. Why? I don't know but he loves it so much that he eats it straight out of the can (heck, what parent is not happy that their kid will eat vegetables? - he eats lots of raw veggies too!) OK is the big discount grocery store here in Japan.  I buy it by the case from OK store  in January of 2008, a can of corn cost ¥85 yen per can. Today, August, 15, 2010, it costs ¥119 per can. That's a 40% increase in price.

This increase in the price of canned foods is pretty much straight across the board.

Japanese CPI. Don't forget that, during this same period, the Nikkei 225

dropped 78% of its value.  

From what I read in the newspapers and online, deflation is dropping house and land prices in Japan... I doubt it. I think it is not deflation, I think we are still in a correction from the bad government monitary policies of the 1980's that caused the bubble, then the bad policies that still are in effect to try to prop up that bubble.

Here is an article from a guy who agrees with me about the no deflation part:

There's a lot of unfounded talk going around these days about how deflation has killed the Japanese economy...(snip)...This chart shows the year over year growth in Japan's Nationwide CPI. Since Mar. 1993, Japan's price level hasn't budged: inflation has netted out to zero. That's over 17 years of price stability. From the very peak in Japan's inflation, which was in late 1998, Japan has "suffered" an average annual decline (i.e., deflation) in its price level of 0.4%. It's hard to see how this might be the killer deflation scourge that it's made out to be.

This is not deflation in Japan, this is a painfully long correction. It will continue this way as long as the government doesn't change policies.

When I go to the store and see eggs, bread, milk, cheese, vegetables, fish and meat dropping in price and then, on my way home, I see gasoline at under ¥100 yen per liter, then I might agree with the deflationists...

This is not deflation, this is just a situation where prices are not zooming up like people had become accustomed too.

-------

Keywords: Deflation, CPI, bubble, Mike Rogers, Marketing Japan, Mike in Tokyo Rogers, recession, depression