TOKYO, Feb 16 Reuters Hiromichi Akiba is stocking his Tokyo supermarket with more chicken because customers who used to buy beef are switching to cheaper meat as rising prices put a squeeze on their spending, his business and Japan39;s economy.

Japan unexpectedly fell into recession at the end of last year as domestic consumption, which accounts for more than half of the nation39;s economy, faltered.

The 0.4 fall in economic output on an annualised basis in the three months to December means that Germany, rather than Japan, is now the world39;s thirdbiggest economy behind the United States and China.

It isn39;t the first economic downturn Akiba has faced. He opened his store in 1992 as the economic boom that made Japan the world39;s No. 2 economy gave way to stagnation. It is, however, one of the toughest yet as inflation and a sustained depreciation of the Japanese yen push up labour, transport and energy costs that are difficult to pass on to the shoppers who come to his discount supermarket looking for bargains.

Customers used to come with lists knowing what they wanted to buy, but now more are deciding what to get after seeing what is cheap, he said at his store in a Tokyo suburb next to baskets offering quartered Chinese cabbage heads for 52 cents and crowns of broccoli for 67 cents.

Japan39;s retailers are at war with each other to win customers, he added.

Retailing giant Aeon says it has also noticed consumer sensitivity to higher prices, with its Chief…