Prices rose across Japan today as a controversial sales tax rise came into effect, with everything from beer to washing machines costing more, sparking fears a drop in consumer spending will derail a nascent economic recovery.
Tokyo hiked the levy to 8.0 per cent from 5.0 per cent as it looks to control a public debt mountain, but corporate Japan's concerns were highlighted by a closely watched survey of business sentiment showing bosses are cautious about the future.
In a country beset by years of deflation, critics warn that already thrifty consumers would snap their wallets shut.
Millions of shoppers made a last-minute dash to stores in recent weeks, while nervous retailers are now watching for signs of falling sales.
The last time Japan rolled out a higher sales levy, in 1997, it was followed by years of deflation and tepid growth, although other factors, including the Asian financial crisis, were also blamed.
Among those waking up to the higher prices was 18-year-old university student Hibiki Ishida, who was not impressed when he bought his favourite chewing gum today.
"I get this gum every morning and I know the price is 120 yen (USD 1.15)," he said.
"But I handed 120 yen to the shop clerk today and she told me it was now 123 yen -- that unnerved me."
Others, like a 20-year-old graduate surnamed Yoshida -- who is set to start a new job and live on her own -- have been planning for the hike, with some help.
"My mother has given me lots of daily stuff like tissue paper and plastic cling wrap," she said.
"So I can survive for the time being."
The rise has presented a huge challenge for Prime Minister Shinzo Abe since he swept to power in late 2012 on a ticket to drag the world's number-three economy out of a cycle of falling prices and tepid growth.
