-Solo, But Not Hollow-||Kabhi Seedhe Kabhi Tede|| CC#2~IO~ - Page 3

At midnight, Japan's sales tax rose to 8 percent from 5 percent. A crush of demand ahead of the first sales tax hike in 17 years has been credited with lifting sales of everything from condominiums to luxury cars -- and raised fears of a sharp downturn in spending over coming months.

That was certainly the experience of 1997, when the sales tax rose to 5 percent from 3 percent -- and spending promptly fell off a cliff.

A deep slump could increase the pressure on the Bank of Japan to expand an already massive program of monetary stimulus by mid-year.

But behind the diaper sales surge, many retailers say, is a factor that did not figure in 1997: increasingly affluent Chinese consumers.

Demand from a grey market of brokers who buy Japanese-made diapers and send them to China was behind the disappearance of Merries and other diapers from store shelves in recent weeks, according to brokers and store managers.