Heterogeneity and convergence of regional inflation (prices)

► This paper verifies if members of monetary unions experience similar levels of inflation. ► Using regional data, we present statistical evidence of heterogeneous inflation in Japan. ► The average inflation differs significantly across regions, and regional inflation responds differently to common economic and monetary factors. ► No evidence is obtained of price convergence in a group of entire regions. ► Therefore, we suggest that diversified regional inflation can exist within monetary union.