Inflation Is Hitting Japanese Households Hard

Prime Minister Shinzo Abe came to power vowing to drag Japan out of deflation and stagnation. His logic was that rising prices would drive higher salaries and increased consumption. More than two years on, prices are rising, but wages adjusted for inflation have sunk to the lowest since at least 1990.

A record 62 percent of Japanese households described their livelihoods as "hard" last year in a survey on incomes. A sales-tax increase in 2014 helped drive up living costs faster than wage gains. At the same time, the Bank of Japan's quantitative easing drove down the currency, boosting the cost of imported energy.