Seems to be a work of fiction
Recently inflation has been bothering me. Well, not inflation itself, but rather the official inflation figures.
Apparently prices in Japan are dropping again, and are down 0.4% compared to last year.
The government has a target to increase inflation to around 2% a year.
On a personal level, deflation sounds good. Everyday life gets cheaper, and our savings and investments go further.
However, the official inflation figures don't seem to match up to my personal experience:
- Food prices in the supermarket seem to be going up.
- Consumption tax went up by 60%, and may be going up again by a further 25%.
- Pension contributions are going up.
- The public gym I go to is raising prices by 26% in October.
- Train fares went up recently on my train line.
My personal rate of inflation does not seem to match the official government figures!
Maybe (probably) I am a strange person whose spending does not reflect the average consumer in Japan. This is likely, but doesn't completely explain the difference.
I mentioned on Facebook that I am reading a book called Own the World (review coming soon) and it has a very interesting chapter on inflation. Then, just a day later, I saw this post on Financial Samurai. The two are very similar.
The gist of their arguments is:
- inflation allows governments to reduce public debt without causing public anger
- official inflation figures have been modified to seemingly reduce inflation
- to combat inflation it is necessary to invest in order to stay afloat, as pensions and incomes are losing value over time
The seeming disconnect between official inflation numbers and my personal experience is something that has puzzled me for a while now, but these arguments seem to make sense and explain a lot.
On the other hand, this article was also published recently.
How about you? What do you think about Japan's inflation figures?