Japanese Consumer Prices:

 Article Source: https://mainichi.jp/english/articles/20220725/p2g/00m/0bu/047000c

Article: 

TOKYO (Kyodo) -- Japanese consumer prices, including fresh food, are expected to rise 2.6 percent in the current fiscal year through March from a year earlier, mainly due to Russia's invasion of Ukraine and the impact of the yen's depreciation, the Cabinet Office said Monday.

It also revised Japan's real gross domestic product growth downward to 2.0 percent from the previous estimate of 3.2 percent released in January.

"Rising prices are a risk to the economy recovering from the coronavirus pandemic," Prime Minister Fumio Kishida said at a meeting of the Council on Economic and Fiscal Policy, where the projections were presented.

Ideas:

Consumer prices increases again, it must be remembered, are not because of an increase in consumer demand or consumer spending but because of an increase in supply prices being passed on to the next in the supply chain, including the final consumer.

A GDP growth of 2.0 percent might be a more realistic estimate of what the Japanese economy is at, and that could be a a stretch, meaning it might even be less than that by the end of 2022.

Increasing prices in many industries are going to crowd out overall spending in the Japanease economy which is going to limit economic growth.

Including the ideas of wage increases which is very important for the Japanese economy to grow.

But as companies are under stress for supplier costs most likely there profits margins are too thin to think about any wage increases at this time.

Article:

To prevent consumption from sliding amid surging prices of essential items, the government has pledged to take necessary steps, including giving reward points to households that reduce electricity consumption and aiding farmers grappling with high fertilizer costs.

The government plans to spend a total of about 260 billion yen ($1.9 billion) on the countermeasures by tapping into a reserve fund.

For fiscal 2023, the Cabinet Office predicted a 1.7 percent increase in consumer prices. It expects crude and other energy prices will remain high.

Ideas:

The government might pledge to help society but they have to make is a user friendly as possible. Meaning if there is too much paper-work or too much red-tape some or many families or those in society might not be able to get the help.

During the pandemic there were many programs related to subdies and so on but the paper-work or red-tape might have been too much for some.

Consumer prices, energy prices, and raw material prices increases are proabably here to stay for a while in the Japanese economy and the Japanese government needs to find user friendly ways to ease the burdend on society and companies.

Article:

The Bank of Japan has estimated prices, excluding fresh food, will rise 2.3 percent in the current fiscal year.

The key economic council includes members of Kishida's Cabinet, BOJ Governor Haruhiko Kuroda and business leaders.

Ideas:

Some might think an increase of 2.3 percent is not that much. And yes, price increases are very much an individual situation. As the elasticiy of prices might not be a big deal for some but it could be a bid deal for fixed income group and or lower income groups who have less to spend on daily necesssities compared to other groups.

But one challenge is Japan for too long, maybe good or not, has not really had to deal with a big increases price increases as Japanese companies usuualy are very reluctant to pass on their cost increases to the next in the supply chain or even the final consumer.

So the past six months or so maybe have been a major challenge in Japan for many in society who are used to deflation or lower prices for maybe way too long.

Now Japan and society have to learn and adjust to the higher prices which might be here for a long time, unfortunately,.

Have a nice day and be safe!