[glandium]

> A lot of businesses used the consumption tax increase to raise prices.

That. And the government encouraged it. In 2004, a law made it obligatory to display prices with consumption tax included (税込み). That obligation was lifted 6 months ago. Guess what happened as a result. Displayed prices didn't change. Products at 1000 yens tax included (税込み) are now 1000 yens without tax (税抜き). 1080 yens out of consumer pockets, instead of 1029. 8% increase instead of ~3%. The flip side is that this makes for better margins for businesses.

Even businesses that did absorb the tax increase now claim to do a bigger favor than they are actually doing (that is, their 1000 yens service is still 1000 yens, but they advertize it's 1000 instead of 1080)

I haven't seen much of the kind of prices increases you describe, though.

[mattm]

Ah, I didn't know about that. When I came to Japan it seemed every price was always tax included. I have noticed recently that some places have tax being extra. Now I see why.