Shopping in Japan is about to get more expensive. The 5% sales tax rises to 8 percent on Tuesday, the first increase since 1997. But as Mike Firn reports the effect on spending hasn't been as big as many economists forecast.

It's the last chance to shop before sales tax goes up but no sign of the lines of frantic shoppers that some predicted.

From April first the tax on everything from a cup of coffee to an apartment goes up by three percent.

The Bank of Japan forecast front loading, shoppers locking-in lower prices, but Japanese families cut spending by 2.5% in February and, while retail sales rose, economists say not everyone has the cash to splash on a spending spree.

"Japan is an ageing society. People have been preparing, they have been buying some things. Often some necessities like toilet paper which do not have a big impact on the overall economy. On the other hand it also means the drop in April in May will not be as bad and overall it will balance out at a growth rate of around 1.5% this year." Martin Schulz, Senior Eeonomist of Fujitsu Research Institute said.

Japanese manufacturers ramped up production this year, expecting higher demand ahead of the tax hike and some have seen the benefits.

A last minute rush for some pricier items helped Japan's big three carmakers sell a lot more cars in February than a year earlier. Toyota's sales rose 14%, Nissan's 18%. Honda's were 29% higher.

Economists say those who benefit the most now will suffer the most from April

"There must be some decline of durable goods. It was observed when tax was raised from 3% to 5%. So I think we will see a similar pattern. However the stimulus package at the same time as the increase in consumption tax rate, it will be implemented in Japan. That will certainly offset the decline of consumption." Naoyuki Yoshino, Dean of Asian Dev't Bank Institute said.

And even though most workers didn't get as much of a pay rise as their unions were asking for in spring wage talks, the jobless rate is now the lowest in six and a half years which may persuade companies to be more generous with this year's bonuses.

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