"Stagnant" wages are offset by dropping prices for goods and services. Price deflation is an unmitigated good. It means the purchasing power of the currency is increasing.
I can't for the life of me understand why it's so misunderstood; and I'm very disappointed in Japan that it's succumbed to the inflation mentality. I suspect there's some tsunami-related reasoning involved.
One of the issues is sticky wages. When wages dropped, so did prices across the board so that the pain wasn’t as acute. Now you have a FED working to reinflate the RE market to save the banks/financial institutions who are members of the FED and appoint a majority of voting members.
So you have a crazy situation where some things are rising in cost and others are falling. That you can buy cheap televisions, refrigerators, etc. isn’t going to help the average person. The FEDs switch to an employment rate target sounds like a set up for inflation. They’ll ignore it until the unemployment rate is “right”.
They’ve resurrected the Phillip’s Curve. You just cannot trust bankers with a country’s currency. The incentives are all wrong.