With cut-rate karaoke, frugality becomes fashionable

Tokyo remains the most expensive city in the world but residents notice that the family budget stretches further every week. They can get cheap shiitake mushrooms and spring onions from China for half the price of domestic fare. New brands of cheap, reduced-alcohol beer appear almost every other month and the big brewers have responded by cutting the prices of their top lagers by 10%. If one wants a western-style snack, McDonald's has a special midweek offer of ¥65 (36p) for a hamburger. Yoshinoya, a Japanese-style fast-food rival, has responded by cutting the price of its gyudon (a bowl of beef and rice) from ¥400 to ¥250. To wash it down, a tall latte from Starbucks is only ¥320 - less than half the cost of a small cup at an old-style coffee shop.

Clothes are a snip thanks to a burgeoning number of discount stores. At Uniqlo, which imports from China, one can pick up five pairs of good quality socks for ¥1,000. There are even bargains in Ginza - Tokyo's Knightsbridge - where The Suit Co offers a trouser-jacket combination for just ¥19,000 which would previously have been three times that price. Even telephone bills will get cheaper next month when NTT cuts its charge for local calls by 15% - the first time the rate has been reduced.

According to government statistics, clothing prices fell 1.7% last year, video recorders were down 5.6% and golf course fees and karaoke studio rentals declined by more than 3%. This year, air fares and utilities' costs are forecast to make even bigger drops.

Along with a slide in prices has come a shift in values. Magazines and TV shows specialising in discount shopping information testify to the way frugality has become fashionable.

According to economist Noriko Hama of the Mitsubishi Research Institute, it is as if Japanese consumers have turned off Dallas and tuned in to Coronation Street. "Deflation is not good for any economy, but it has helped to waken people up. The mentality is very different from the bubble era. It is much more down to earth."

With savings increasing - the average Japanese family has £87,000 stashed away - consumers are comfortable with the gentle declines they have experienced so far. It may even be a long overdue sign that the country's infamously workaholic population is starting to chill out. So, despite the dismal statistics, the night clubs of the trendy Shibuya district are overflowing, new skyscrapers are rising in the business district and the latest additions to the Tokyo Bay skyline are two huge ferris wheels.