Life in Tokyo is world's costliest
MITI blames appreciation of yen for results of survey, which compared 88 goods and services in major centers
August,2000
YUMIKO SUZUKI
Staff writer
The cost of daily living in Tokyo was higher than in any other major world city in 1999, according to a survey released last week by the Ministry of International Trade and Industry.
Examining 88 goods and services, the ministry determined that the price gap between Tokyo and other cities widened in almost every item last year.
According to the survey, overall prices in Tokyo were 1.60 times higher than those in New York, 1.48 times higher than in an aggregate of three major cities in Europe - London, Paris and Frankfurt - and 2.03 times higher than in Singapore.
In the previous year's survey, Tokyo prices were 1.52 times higher than in New York, 1.19 times higher than in the European cities, and 1.73 times higher than in Singapore.
The ministry attributes Tokyo's higher prices to the yen's 15-30% appreciation against other major currencies. But some economists question the items selected by the ministry. "I doubt all the items the survey covers are the kinds of goods Japanese consumers actually buy," said Susumu Takahashi, chief economist at the Japan Research Institute.
While prices of cameras, home appliances, automobiles and motorcycles in Tokyo were lower than those in some other cities, the price gap for services was much bigger than that for consumer goods. Fees for gyms in Tokyo were 3.58 times higher than in New York and 2.51 times higher than in European cities. Monthly fees for fitness and swimming clubs, cooking classes and foreign language schools were 2.14 times higher in Tokyo than in New York and 2.61 times higher than in Singapore. In a related cost survey, MITI found charges for nursing care were also higher in Japan than in the U.S. and Germany.
Responding to the spread of business-to-consumer online trading activities, the ministry also surveyed the prices of goods sold over the Internet by Japanese, U.S. and German firms. The study revealed that the average price of goods sold locally online by Japanese companies was 1.46 times higher than in New York and 1.29 times higher than in Frankfurt.
At the time of the survey, held in November 1999, $1=106.31 yen, while 1 pound=174.57 yen, FFr1=16.82 yen, DM1= 56.4 yen and S$1=64.1 yen, compared with $1=122.47 yen, 1 pound=205.98 yen, FFr1= 21.89 yen, DM1=72.74 yen and S$1= 74.76 yen the previous year.
"I think the higher yen must have offset some of the effects of price lowering," said Akiyoshi Takumori, chief economist at Sakura Securities Co. But, he said: "Since the Japanese economy got back on a recovery path last year, not all prices of goods have been down - some have been rising."
Takumori noted that prices have stabilized globally. "Take the EU, for instance. The region's consumer price index rose only about 1% last year thanks partly to monetary unification effects. Prices of some goods might have dropped more in European countries than in Japan," he said.
But he also questioned the way the survey was conducted, saying prices of goods sold at a volume seller differ considerably from those at a department store offering little discount. MITI officials said they checked the price of each good sold at a department store, a specialty store and a discount store. But they declined to reveal the exact names of the stores they checked with.
Japan Research Institute's Takahashi is more critical of the survey. "The yen's sharp appreciation must have helped widen the price gap between Japan and other countries. But I doubt the survey reflects the real condition. Since consumer prices have been falling a lot in Japan, it could have offset the effects of the higher yen," he said.
However, Takahashi acknowledges that public utility charges and some other costs like bank fees and rent for housing as well as prices of goods sold online are still higher in Japan. "These areas lack serious price competition. Both prices of goods and services offered over-the-counter and those sold online could fall further in Japan with additional deregulation and streamlining of distribution system," he said. |
