Since Japan relies for various resources heavily on imports, increases in energy and materials prices imply an outflow of income to overseas. For example, relative to early 2002, Japan's export prices have decreased by around 5 percent whereas import prices have risen by around 60 percent, causing a deterioration in Japan's terms of trade.
The deterioration in the terms of trade has been especially acute recently. Corporate profits have started to decrease and the growth in corporate fixed investment is slowing. In the household sector,  BIS Review 95/2008  1  real purchasing power has decreased since prices are rising while growth in wages remains moderate, and private consumption is becoming somewhat sluggish.