Consumption tax rise and Japan's cautious shops

April 1 is not only April Fools Day where I am now. This year it brings one of the biggest changes in Japan in a long time. For the first time since 1997 the consumption tax goes up from 5% to 8%. 100 yen shops will sell stuff for ¥108 yen, not ¥105, the figure we've come to like in the past years. All other prices will rise, too. As a society averse to major changes, it is interesting to see how the Japanese society, particularly retail businesses, respond to the tax rise. The public, naturally, is not happy, although there are people who understand that change is necessary after years of stagnation.

Speaking of major change, I should point out that I have been surprised many times in the past at how little of it happens in Japan. Of course, it is all relative, and one has to give the Japanese society credit for at least coping well with change, if not welcoming it. What happened three years ago is illustrative here: I admire the way the people and the country responded to the greatest disaster in the nation's history in March 2011. Still, as someone who grew up in a turbulent time (I was nine when the Soviet Union collapsed on all of us), I find the stability in Japan pretty intriguing. Just an example: when I returned to Japan for the first time in two and a half years last summer, I was astonished by how little had changed in my absence, despite the Great Northeastern Disaster. The prices were the same everywhere - not just in kombini, but in pretty much every shop I visited. Railway prices were the same, the train schedules were unchanged, people were as friendly. Of course, two and a half years is too short a time, but even in England, where I spent the last couple of years before coming to Japan, prices change nearly every month (hello, Sainsbury's shoppers!).

Perhaps mindful of this wariness towards abrupt changes, the shops in Japan were very careful considering the psychological consequences of the tax rise in consumers. I am no expert in consumer psychology (although I have taken part in numerous consumer behaviour experiments at Cambridge. As a subject!) but even I understand that sudden rise in the prices will definitely result in a decrease in sales. The shops in Japan responded in their own ways and there was no single strategy, but what some shops did was quite peculiar.

One day in early March, on a trip to my local supermarket (which happens to be owned by Walmart) I noticed that everything there had become cheap overnight. Wow, I thought. I had completely forgotten about the expected tax rise and the only reason I could think of at the time was that the supermarket was going through renovation and the price drop was to lure customers away from competitors.

It took me a few days to understand that all products had become 5% cheaper. Only then did I realise that instead of showing new, increased prices, the supermarket had decided to separate the tax from the price of the product altogether. On my next grocery trip, I looked closely at the fine print besides the price, which, instead of the usual "tax included" now said "tax excluded".

For many people around the world - our friends in the US, for example - this is the usual state of things. They are used to the mathematical acrobatics of calculating in your head the tax and adding it to the price. But not me. My humanities brain, tired after a full day of reading Japanese articles, goes totally blank when I attempt this. Moreover, I feel cheated at the till when I am charged 8% more without being reminded, not because I don't want to pay the tax, but because I prefer to know how much I am going to pay before I go to the counter. So, if they had asked me before introducing this cruel practice, I would have told the overly cautious retailers: I prefer seeing the higher price than applying, in my head, the formula x+0.08x to every price every time, day, week and month!