If the United States’ bout of rising prices soon eases, its economy could fall back into the cycle of weak inflation that preceded the pandemic —

Inflation? Not in Japan. And That Could Hold a Warning for the U.S.

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2021-07-16 16:30:08

If the United States’ bout of rising prices soon eases, its economy could fall back into the cycle of weak inflation that preceded the pandemic — a situation much like Japan’s.

TOKYO — In the United States, everyone is talking about inflation. The country’s reopening from the coronavirus pandemic has unleashed pent-up demand for everything from raw materials like lumber to secondhand goods like used cars, pushing up prices at the fastest clip in over a decade.

Japan, however, is having the opposite problem. Consumers are paying less for many goods, from Uniqlo parkas to steaming-hot bowls of ramen. While in the United States average prices have jumped 5.4 percent in the past year, the Japanese economy has faced deflationary pressure, with prices dipping 0.1 percent in May from the previous year.

To some extent, the situation in Japan can be explained by its continued struggles with the coronavirus, which have kept shoppers at home. But deeper forces are also at play. Before the pandemic, prices outside the volatile energy and food sectors had barely budged for years, as Japan never came close to meeting its longtime goal of 2 percent inflation.