Silent inflation in Japan

2018/3/4. Silent inflation in Japan:To the wild inflation...

These days, silent inflation is happening in Japan. Silent inflation means that prices are fixed, but components are smaller or lower grades.

This phenomenon doesn’t appear in economic indexes as inflation, because prices are same. So it will be called silent inflation.

What does it cause by?

I think that there are 2 reasons, limit of cutting costs & individuals’ incomes.

1)Limit of cutting cost

This shows that the prices will get higher in near future.

2)Limit of individuals’ incomes

This is caused by non-workers (such as retirement people).

And the wild inflation will be happening in Japan, because the commodity prices is getting higher. 

Deflation was caused by victims of developing countries, such as low prices of commodity. But new developed countries need more commodity, and Japan is losing buying power as relatively.

Losing buying power, limit of cutting costs and limit of incomes will cause the wild inflation. 

Losing buying power:Increasing higher prices of materials.

Limit of cutting costs:Companies will change the price to be higher.

Limit of incomes:Equilibrium point is still same, because the demand line move to left. But demand line can’t move to more left, and provide line moves to upper. 

So equilibrium point will be more left & up.

This will work for wild inflation.