Consumer price gaps shrink between Tokyo, other cities

Asian Economic News, June 24, 2002

TOKYO, June 21 Kyodo

The gap in consumer prices and fees between high-cost Tokyo and the world's five other major cities shrank as of January this year from a year earlier, the Ministry of Economy, Trade and Industry (METI) said Friday.

The gap shrank substantially with all the five cities surveyed for the second consecutive year, due mainly to the weakened yen and deflation in Japan, METI said in an annual report.

Tokyo prices came to be 15% higher than those in New York, down from the 29% gap in January last year, while the gap shrank to 14% from 32% for London, 22% from 42% for Paris, 24% from 41% for Frankfurt, and 67% from 80% for Singapore, METI said.

Deflation, particularly in consumer service fees, helped boost the yen's purchasing power in Tokyo compared with currencies used in four cities other than New York, where it was almost unchanged, the report showed.

Of the 71 consumer goods and 17 services surveyed, the number of items priced lower in Tokyo than in all the other cities rose to 10 from five.

Color television sets, videocassette recorders, personal computers (PCs), video game consoles and automobile polish newly lined up as relatively low-priced in Tokyo, while electric razors, 8-milimeter video tapes, Japan-made passenger cars, motorbikes and PC software were the same as last year.

The gap in business machinery and service costs between Japan and its seven rival economies, meanwhile, shrank as with the United States, Germany, Hong Kong, Singapore and China, but expanded with South Korea and Taiwan, METI said in a separate annual report.

Average costs in Japan of 152 production machines and 33 industrial services were 81% higher than those in the U.S. as of the September-November period last year, down from 87% a year before.

The gap with China was the largest, with costs there 5.56 times lower than in Japan, marginally down from 5.57-fold, followed by Taiwan, where costs were 3.95 times lower, up from 3.83-fold, and South Korea, with costs 3.73 times lower, up sharply from 2.29-fold.