Comparing consumer prices in Japan with those in other advanced economies, what stands out is the decline in service prices, implying that while flexible wage adjustments have been effective in terms of preventing an increase in unemployment, in return, they have put consistent downward pressure on the prices of labor-intensive services.
The third potential reason, which I believe is the most important one, is that expectations for future economic growth have declined. This decline in growth expectations has been further  6  BIS Review 11/2010  spurred by the aging and shrinking of Japan’s population.