The Japanese housewife has been blamed for more than one financial fiasco.
They are considered to be a major player in the carry trade, which moves the yen considerably. I guess it is the quest for yield above the 0.025% paid on bank accounts, but they seem to love the ForEx market. Their recent fear of the recession brought A LOT of money back to Japan, giving undue strength to the yen.
Now a report suggests that they are partially responsible for the continued deflation in Japan through the use of social networks to find the cheapest price on supermarket goods.
I saw a show about this a few weeks ago, and now CNN has picked up the story. It’s a decent story and video, but it doesn’t go as far as the show I watched.
Basically, a large group of people are part of a shopping network (something like Tweeter for the Homemaker). They look through the flyers in the morning paper, and input the prices on sale. The system then filters for the lowest price in a certain location, and sends that information to subscribers.
If that were the end of it, I don’t think there would be such a big problem. It is no different from when my wife, her sister and mother compare prices and buy thing for each other.
The real problem arises because store managers are now also part of the network, and when they see a price lower than theirs, they adjust their price to be one yen lower. The result is a downward spiral of prices.
Don’t get me wrong. I am an advocate of deflation, and don’t buy into the government spiel about a little inflation is a good thing. It is only good for people who owe money. My problem is the speed at which this is happening. If prices drop yen-over-yen in a short time, it is only minutes before stores are forced to operate at a loss.
Much like anything, moderation is the key. And thankfully, this is only in Tokyo for now… the prices in Tokyo are too high anyway.
I just wish someone would focus on the cost of gas, or rent in Japan, rather than trying to save 3 yen on a pack of eggs.