Evidence on Price Stickiness in Japan
Using microdata from the Retail Price Survey (the basic statistics for the Consumer Price Index), we document facts regarding price stickiness in Japan. The main results are as follows: (1) The average frequency of price changes approximates 20% on a monthly basis. (2) The frequency of price changes is more heterogenous than that in the U.S. (3) Whereas no clear relationship exists between the frequency and size of price changes, a positive correlation emerges between the size of price changes and price dispersion across stores. (4) Large cities tend to have a higher frequency of price changes and smaller price dispersion than small cities. (5) A positive relationship exists between price changes and jobs-to-applicants ratio for some services, whereas a negative relationship exists between the frequency of price changes and jobs-to-applicants ratio for some goods. (6) Behind the 2022-23 price increase, the frequency of price changes exhibits a notable increase for certain goods and services such as eating out, while no distinct change is observed for the size of price changes or price dispersion.