In Japan, many people remain reluctant to spend even as retailers and restaurants lower prices.
This deflationary mindset prompted a Japanese economist to say that it might take Japan up to 20 years to reach its 2% inflation target.
Here's an excerpt from a March 19 Wall Street Journal article headlined "In Japan, They're Still Worried About Deflation, Not Inflation":
A restaurant chain just made its fried-chicken meal about 50 cents cheaper. A Uniqlo shirt costs a dollar or two less as of this month. And home-products maker Muji slashed the price of a storage box by 35%.
In Japan, the world's deflation champion, America's talk about inflation heating up is a "fire on a distant shore," as the Japanese saying goes. Despite eight years of spending trillions of dollars to perk up the economy, the central bank is still digging in for a lengthy further battle with falling prices.
Prices excluding fresh food fell 0.4% in February compared with a year earlier, the government said Friday just as Bank of Japan policy board members were gathering to discuss again how to get the nation's consumers and lenders into a more spirited mood.
Their answer, for now, was more fine-tuning. The central bank said it might lower its short-term interest rate to minus 0.2% or further from minus 0.1% now, and it laid out a path for doing so without hitting commercial banks' profitability. It also said it would give incentives to boost lending.
"We will continue powerful monetary easing patiently to achieve our 2% inflation target," said Gov. Haruhiko Kuroda.
Japan has been struggling with deflation for more than two decades. While price cuts look good to consumers, steadily falling overall prices can lead to a negative cycle of low corporate investment and sluggish wages...
Some economists said they didn't expect much inflation even after the coronavirus pandemic eases and people can shop and travel again as they did before 2020.
"To win that demand and compete with rivals, companies are unlikely to carry out price increases," said Kazuo Momma, an economist at Mizuho Research Institute who formerly served as a BOJ executive director in charge of monetary policy. "It wouldn't be surprising if we don't reach 2% inflation for another 10 or 20 years."
Will the Bank of Japan's "powerful monetary easing" finally get the inflation rate to 2%?
Well, it's instructive to note this quote from Robert Prechter's Conquer the Crash:
Since Japan's boom ended in 1990, its regulators have been using every presumed macroeconomic "tool" to get the Land of the Sinking Sun rising again, as yet to no avail.