Japan Price Increases:

 https://mainichi.jp/english/articles/20210930/p2g/00m/0na/055000c

Article:

TOKYO (Kyodo) -- Japan will experience price hikes in some food and tobacco products as well as services from October, partly due to a spike in global raw material prices, dealing a further blow to households hit by the fallout from the coronavirus pandemic.

Starting Friday, dairy producers Meiji Co. and Megmilk Snow Brand Co. will increase prices of their margarine products, as international prices have soared due to a surge in global demand and lowered output in major producing areas due to poor weather.

For Meiji, the retail price will increase by up to 12.8 percent and the Megmilk Snow Brand will pass on an up to 12.2 percent bump.

Ideas:

The increase in raw material prices might be due to the continued global supply chain challenges such as transportation problems and imbalances in shortages of raw materials.

And at the same time, because of weak demand during the pandemic, many companies might have been reluctant to increase or "pass on" their costs to the next in the chain, whether companies or the final consumer.

Whenever there are challenges in producing or growing because of weather which might result in lower supply than expected growers and producers are going to raise the prices they charge in order to try and keep the same amount of revenue with the smaller supply.

And of course you add in a surge in demand and producers/growers will automatically increase prices and more buyers want their products.

There might be some more than usual prices increases this fall, as the pandemic finally begins to run its course and more consumers are out and about and demand begins to maybe get back to or near the pre-pandemic level for some products and even services.

Article: 

Food and beverage maker Ajinomoto AGF Inc. is increasing the price of its 40 coffee products, estimating they will soar some 20 percent.

According to Ajinomoto AGF, it expects the inflated market rate to remain so for the time being, citing the anticipated recovery in global demand for coffee with economic activities gradually resuming after the pandemic.

Under the government's repeated state of emergency declarations over the pandemic since spring last year, people have been asked to refrain from nonessential outings while businesses were asked to temporarily shut down or shorten their operating hours.

Ideas:

An increase in 20 percent might be because Ajinomoto is trying to make up for lost sales during the pandemic period when demand might not have been so good for the company.

And so it looks like the inflated rate will remain as they try to recover what they can from the long pandemic period when demand was not what they wanted or needed.

So as consumers now begin to venture out more and more there will be more trips to the supermarket, more trips to the department stores, more trips to restaurants, etc.

But at the same time it might take some time for companies to make up for lost sales and revenue, it at all, that was lost during the pandemic.

What Ajinomoto AGF needs to be aware of, and of course they are, is the ongoing supply chain transportation problems, such as if they ship their products to the US, where container ships trying to unload their containers in LA or Long Beach California have had long waiting periods outside the ports off the California coast because of labor shortages and not being able to unload the ships as quickly as needed.

Article:

Japan's economy has yet to recover to pre-pandemic levels mainly due to sluggish consumer spending, which could be affected by the price hikes.

Following a cigarette tax hike in October, Japan Tobacco Inc. will revise its pricing, with the per-pack price for Seven Stars, one of the company's signature brands, increasing from 560 yen ($5) to 600 yen.

Among other price hikes starting in November, major frozen-food maker Nichirei Foods Inc. will increase prices of consumer products by some 4 to 8 percent. Prices for commercial sales will rise around 3 to 10 percent to "maintain current product quality and stable supply."

Ideas:

Japan's economy might not get back to the pre-pandemic level until the spring of 2022, as not all consumers are going to resume all pre-pandemic activities all at once. 

Then you add in the continued challenges with services and especially the domestic tourism industry which might take some time to completely recover.

And of course even worse is the international tourism industry. Its hard to replace up to a millions international tourists a month with the domestic tourism industry.

And then add in the increase in prices that maybe companies now feel they have to no choice but to finally "pass on" their costs to consumers.

But the problem might become similar to 2014 and 2019 when the Japanese government increased the sales tax from 5 to 8 percent and then 8 to 10 percent each of the years. 

And what happened when they did? For example in the Q2 of 2014 consumer spending went way down as possibly consumers spend in Q1 what they needed before the prices increased on April 1 in 2014. 

And then in 2019 Q4 spending was down as consumers either spend early or didn't want to spend because of the higher prices.

In September of 2019, as I observed, being in Yokohama, many stores and businesses were having pre-tax increase sales as a way to get consumers to buy before the October 1 sales-tax increase.

But as always, even though prices increased, consumers always begin to get used to the higher prices and consumer spending starts to get back to some kind of normal which did happen in 2014 and 2019.

So most likely consumers in the fall of 2021 will also not like the prices increases but most likely will eventually begin to get used to the higher prices if they can afford them.

Article:

Residents will also face higher utility bills in November.

The monthly household electricity bill for an average household will be 73 to 171 yen higher than in October, while the natural gas bill for an average home is set to climb by 91 yen, at most, according to power and gas companies across the nation.

Households in Japan will also see from next year price changes in other products such as bread.

The prices of bread and udon noodles will increase around January, following an announcement by the Ministry of Agriculture, Forestry and Fisheries of a 19 percent price rise on average for six months from October for wheat imported by the government and sold on to private milling firms.

The farm ministry has cited "China's brisk buying" and "a large increase in sea freight costs" behind its decision to increase prices.

Ideas:

An increase in global energy prices are increasing globally and Japan consumers and companies will see increases in prices or costs.

Companies who use a lot of energy such as oil and see an increase in energy prices or costs most likely will pass on the costs whomever is next along the chain.

An increase of 73 to 171 yen might not seem like much but for some it could be a lot. Especially when you add in increases in daily food or households needs. So if all of those are increasing all at once, as it looks like its going to happen due the companies trying to make up for lost sales and revenues. for some consumers/people it might be too much.

Freight or shipping costs are become too much for many companies now. And the shipping companies are beginning to recognize that costs are becoming too much so they are taking the needed steps to try and control their rates they have to charge globally.

Have a nice day and be safe!