By Daniel Leussink

TOKYO (Reuters). Ito-Yokado, a Japanese supermarket chain, will run a government-backed experiment to give variable discounts on more then a dozen products. The discount is to be applied as the expiry date approaches in an effort reduce waste.

An analyst warns that Japan could lose its efforts to encourage long-term consumer price growth by adopting a dynamic pricing system in which goods are priced differently based on shelf-life.

The Bank of Japan has failed to raise inflation by 2% in the past nine years of ultra-easy monetary policy. Weak wage growth and persistent deflationary attitudes among the general public have impacted consumption as well as firms’ desire to increase prices.

As the government seeks lower food waste costs, the Ministry of Economy, Trade and Industry could support a tendency to reduce prices for goods nearing expiry.

Ito-Yokado will offer discounts on 16 products in a Tokyo shop as part of the trial. This is to encourage shoppers to purchase items with near expiry dates. The goal of the discounting program is to reduce food waste.

According to the spokesperson, prices could change depending upon the day.

This trial will last until next month.

According to Toru Suehiro (senior economist, Daiwa Securities), dynamic pricing that is based on expiry dates may cause consumers to delay shopping while they wait for better prices. This won’t raise prices.

Suehiro indicated that “it may have a detrimental impact on inflation”, but added that this all would depend on the way dynamic pricing habits are represented in the government’s consumer price index survey.

However, other analysts were optimistic that the people’s savings could increase their disposable incomes which can then be used for other purposes.

Toshihiro Nakahama, an economist with Dai-ichi Life Research Institute said, “On top, that will help businesses make more money selling something instead of disposing it.”