Reply To: PPI vs CPI Deflation Japan


Overall prices fall because of a change in the money relation. The money stock fall relative to money demand or money demand increases relative to the money stock. The former is more common during a bust.

The link between prices of consumer goods and producer goods is the rate of interest. Typically, then the price spread falls during the boom and then moves up in the crisis. During the bust, it can move either up or down depending on how time preferences change.

Here is the Bank of Japan page on prices:

Here is the BOJ statistics on corporate prices from 1980 to the present:$graphwnd_en

The website will make other graphs by selecting a series, like “wholesale prices.”