Japan Food Prices:

 Article Source:  https://mainichi.jp/english/articles/20220601/p2g/00m/0bu/060000c

Article:

TOKYO (Kyodo) -- Over 10,000 food items in Japan will experience price increases of an average 13 percent this year as a result of rising materials costs and the yen's rapid depreciation, a survey by a credit research firm showed Wednesday.

The Teikoku Databank Ltd. survey found that 105 major food manufacturers had raised prices on 6,285 products by June, with price hikes planned for an additional 4,504 products from July onward.

A growing number of Japanese companies are selling products at higher prices as the coronavirus pandemic and Russia's ongoing invasion of Ukraine have caused the cost of everything from wheat to crude oil to rise.

Ideas:

There might be prices increases related to many items but just how much are consumers going to be effected by the price increases. Some consumers might notice the increases and some consumers, depending on the product might not notice.

Of course the fixed income and low income consumers might notice the prices increases but most likely the higher income consumers might not notice or even care.

But just like the 2014 sales tax increase and the 2019 sales tax increase, most likely consumers eventually got used to the increase in the sales tax. So most likely consumers will eventually begin to get used to or adjust to the price increases and or they will find subsitutes if possible.

Prices increases might be both a positive and negative for the Japaanese economy. For example for maybe too long Japanese consumers got used to deflation and very low prices on many things. 

So the prices increases might not really be that bad a thing as maybe the increase in prices are bringing the economy back into some kind of equilibrium, even though energy prices and raw material prices are running too high at the moment.

Article:

Russia, the world's biggest wheat exporter, and Ukraine together account for about 30 percent of international exports of that grain, according to the U.S. Department of Agriculture.

The average price at which Japan's farm ministry sells imported wheat to the country's milling companies has risen by 17.3 percent since April. The selling price is calculated based on the average price of wheat that the government imported in the past six months.

The depreciation of the yen has presented further challenges for Japanese companies as it boosts import prices and leads to higher production costs.

Ideas:

As imported wheat prices increase that means any kind of bread, snacks, cakes etc. are seeing increases in prices. So the next step is of course are companies or which companies are passing on their price increases to consumers and or which are holding the line because they think their customers might be too price sensitive and might find other similar products at lower prices to buy.

Japan companies maybe for too long held the line of raw material price increases and just absorbed the increased costs as a way to keep their customers coming back thinking their customers are very price sensitive and any price increase might see a decrease in customers.

And of course now add in the weak yen and it makes raw material costs, just as wheat even more expensive for companies. At some point their profit margins are going to get very thin and they will have no choice but the pass on some or all of their cost increases.

Article:

In the past, companies have tried to minimize the impact on consumers through "stealth price hikes" -- a phenomenon known elsewhere as shrinkflation in which the size of products is reduced but the price is unchanged -- or several incremental price revisions, but soaring materials costs have "moved beyond" what they can absorb, Teikoku Databank said.

Alcoholic beverages and other drinks will see the largest price hikes at an average of 15 percent due to rising costs of wheat and plastic bottle packaging, according to the survey. Over 80 percent of the products will have their price increased in July or later.

Prices of processed foods, which account for 40 percent of products to see a price hike, will rise by an average of 14 percent, while sweets will rise by an average of 12 percent, seasonings 11 percent and bread 9 percent, the survey showed.

Ideas:

Stealth price hikes are a common strategy everywhere in the world and not just in Japan. Just look inside a potato chip or similar product package and see how much the amount inside the package as decreased.

The size of the package is the same but the amount inside might not even be half of the capacity of the package.

Or they will use incremental price revisions, a little here and a little there which the customer might not even notice until one day the customer notices the price as gone way up on the product.

And or course a combination meaning both reducing the amount in a package and increasing the price gradually over time.

Prices increases o 14, 12, 11, and 19 might not be much for many or some, but for some it could be a lot and over time it might become too much.

Article:

The research firm said it is highly likely companies unable to absorb rising materials and production costs with the current price revisions will raise prices again within the year, with it describing price increases as moving at an "unprecedented pace."

The soaring prices have stoked fears of stagflation, a situation in which an economy experiences inflation during a recession, with post-pandemic recovery likely to be hindered as spending declines in struggling households.

Ideas:

Yes, price increases are moving too fast or might be too fast for many companies and they have no choice but to pass on some or all of their costs.

They of course might try to limit their offerings if possible, meaning reduce the amount of the product but only increase the price slightly to make sure they don't lose too many customers.

But if the price increases are/will become a mainstay of the Japanese economy its possible, maybe over time, that Japanese consumers will just get used to the higher prices after decades of deflation and or very low prices.

But only time will tell as to how long its going to take for the Japanese consumer to get used to what other consumers pay around the world. 

Good or bad it is what it is at the moment. 

Have a nice day and be safe!