The problem of falling prices should be handled by gradually increasing the consumption tax to 15 percent over a decade from the current 5 percent, according to a proposal made in a report by Fuji Research Institute.
The deflationary trend has also been noticed by ordinary citizens, according to advertising agency Dentsu Inc. A survey it conducted in February shows that 33.4 percent of people polled in the Tokyo metropolitan area have personally observed falling prices.
The reports follow a government announcement last month that the economy is in the grip of deflation due to continued consumer and wholesale price falls. It was the first time for the government to acknowledge a state of deflation since the end of World War II.