Japan s COVID crisis reawakens deflation fears as cash hoarding returns Reuters 1/27/2021
By Leika Kihara and Kaori Kaneko
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TOKYO, Jan 27 (Reuters) - A spike in coronavirus infections in Japan is driving local households to do what they have always done in times of crisis: spend less and save more, stoking fears of a deeper retail recession and grinding deflation.
Fifty-year-old Hiromi Suzuki is doing just that having quit her job at a Tokyo novelty store in December after the pandemic hit sales. I try not to spend money, she said, walking her dog in the city. Since I don t go out much, I don t buy cosmetics or clothes any more.
Pedestrians wait at the Shibuya crossing near Shibuya Station in Tokyo on Dec. 13 while maintaining social distancing to prevent the spread of infections. (The Asahi Shimbun/ Kazuyoshi Sako)
A spike in coronavirus infections in Japan is driving local households to do what they have always done in times of crisis: spend less and save more, stoking fears of a deeper retail recession and grinding deflation.
Fifty-year-old Hiromi Suzuki is doing just that having quit her job at a Tokyo novelty store in December after the pandemic hit sales.
“I try not to spend money,” she said, walking her dog in the city. “Since I don’t go out much, I don’t buy cosmetics or clothes anymore.”
TOKYO (REUTERS) - A spike in coronavirus infections in Japan is driving local households to do what they have always done in times of crisis: Spend less and save more, stoking fears of a deeper retail recession and grinding deflation.
Fifty-year-old Hiromi Suzuki is doing just that, having quit her job at a Tokyo novelty store in December after the pandemic hit sales. I try not to spend money, she said, walking her dog in the city. Since I don t go out much, I don t buy cosmetics or clothes any more.
Ms Suzuki s case exemplifies the trouble Japan faces as Covid-19 state of emergency measures were reinstated in January, hitting spending on services, which makes up one-third of total consumption.
Jan 26, 2021
A return to deflation is a nightmare scenario for Japanese policymakers after years of arduous efforts to prevent prices from falling, but the coronavirus pandemic is raising fears that it may become a reality.
The economy is increasingly facing downside risks following a second state of emergency declared over the novel coronavirus, which is in place until Feb. 7 in Tokyo, Osaka and some other prefectures, hitting demand especially in the services sector.
With annual wage negotiations between management and labor unions getting into full swing in February and March, companies appear reluctant to raise pay after a difficult 2020 and ahead of an uncertain 2021.
Japan's industrial production likely declined again in December and retail sales are also expected to have slipped, a Reuters poll found, reinforcing worries a recent sharp increase in COVID-19 cases could derail a fragile economic recovery.