Japanese Prices Highest Since 2008.

 Article Source: https://mainichi.jp/english/articles/20220706/p2g/00m/0bu/052000c

Article:

TOKYO (Kyodo) -- Nearly 90 percent of Japanese felt prices rising from a year earlier, the highest in 14 years, a Bank of Japan survey showed Wednesday, as Russia's war against Ukraine and a sharp drop in the yen have sent energy and food prices higher.

Accelerating inflation should come as a relief to the BOJ, which has been struggling to attain its 2 percent target in a country long stuck in deflationary mindset. But cost-push inflation is seen by the central bank as transitory and households are now feeling pain without strong wage growth, a key issue in Sunday's House of Councillors election.

Ideas:

It must be remembered that the increase in inflation is not related to consumer spending or consumer demand but rather supplier cost increases. So I think we can't really say the BOJ's goal of 2.0 percent inflation has really been reached yet.

If it was consumer demand and consumer spending that was the reason for the increase in prices then we could definitely say the BOJ's goal has been reached.

But in this case consumer spending might actually be decreasing some even though consumers are now able to be out and about more than before.

Wage growth is a major problem now as companies might be feeling strong effects of higher raw material and energy cost and have no room in their profit margins at this time to increase wages.

Article:

In the quarterly survey, a combined 89.0 percent of respondents said prices went up "significantly" or "slightly" from a year before, up 7.8 percentage points from the previous poll in March and the highest since September 2008. Of the total, 82.9 percent said rising prices are "unfavorable."

For a year from now, 87.1 percent expected prices to rise significantly or slightly, up from 84.3 percent and also the highest since June 2008.

Ideas:

Prices inceass among companies might be felt or seen differently as the survey has shown. As a resul the idea that all companies increased the prices exactly the same might not be an accurate description as each company might feel the prices increases differntly and as result might take differnet approaches to increasing their prices along the supply chain.

The idea that prices will continue to increase a year from now is not uneasonable to guess, and there doesn't seem to be an end to increasing prices at this time or there doesn't seem to be any light at the end of the tunnel for companies to be optimistic about just yet.

Article:

Asked how much they felt prices increased from last year, respondents estimated they rose an average 8.1 percent, expecting an 8.3 percent growth over the coming year.

The BOJ has been seeking to change what it sees as deeply rooted perceptions among Japanese that prices will not rise.

Ideas:

Japanese businesses and Japanese consumers need to understand that this is also a global situation and Japan is very much integrated into the global economy and prices are increasing in every country including Japan.

The price increases are not going to go away anytme soon so Japanese companies need to develop some price increase strategies to overome the increase in prices and Japanese consumer need to find ways to overcome the high prices too.

Maybe the days of de-flation is long gone from Japan or at least for the time or this is giong to be the new normal in Japan for now on.

Article:

The country's core consumer price index excluding volatile fresh food items has topped the 2 percent target, but BOJ Governor Haruhiko Kuroda has taken the view that commodity-led inflation will not last long and thus monetary easing should continue to support the economy facing downward pressure.

Some 43.2 percent said they were worse off than a year earlier, up from 41.7 percent in the March survey. Of those who cited worsening household conditions, 78.9 percent said rising prices were to blame.

But I think its a good ideas to keep the monetary easing strategies in place as the Japanese economy might still be too fragile for the interest rate increase we see in the US and the EU.

Ideas:

Kuroda might be right but who knows exactly when inflation is not increasing.

 Perhaps, as always, he is trying to remain postive in a flood of negative information about priees and inflation.

But just what does worse off mean exactly. Yes, no one really like increases in prics but how much affects is really having on consumes at this time.

It has been said that Japanese households have large sums of cash in the banks that aren't using at this time.

Of course that isn't all consumers or all households but it could be significant number of consumers.

Perhaps its also the idea that Japanese consumers, for too long, have gotten used to low prices and now that prices are increasing they are unable to cope with idea of products and things they used to buy at a low or reasonable price have become too high for their liking.

Article:

Inflation has become a hotly debated issue during campaigning for Sunday's upper house election as it directly affects voters.

Prime Minister Fumio Kishida, who heads the ruling Liberal Democratic Party, has attributed the recent bout of inflation to the war in Ukraine, vowing to take necessary steps to mitigate the blow to households.

Ideas:

Any time there is an election politicall candidate suddently become interested in what might be important for consituents who have been worried about certan issues for a long time.

Most likley, unfortunately, after the election is over the issue of inflation won't be mentioned much again.

Perhaps the Japanese government feels inflation is a problem for the Bank of Japan to solve and not a Japanese government problem.

Article:

Major opposition parties are calling for a cut in the consumption tax from the current 10 percent as a way to support households despite the ruling coalition dismissing the idea.

The major opposition Constitutional Democratic Party of Japan has labeled the rising price trend as "Kishida inflation" and taken issue with the yen's depreciation that has raised import costs for resource-poor Japan.

The yen's recent weakness reflects a widening gap between interest rates among major economies. The BOJ is firmly committed to maintaining its ultralow rate policy, while its U.S. and European peers have raised interest rates to rein in inflation or are planning to.

Ideas:

I wouldn't blame Prime Minister Kishida for the inflation situation as inflation had been increasing long before he came into office. 

But it was since the Ukraine situation has inflation seems to have increased a lot recently.

Of course, in every country, the opposition is going to blame everything on the ruling party.

The BOJ and not following what the US and the EU does is probably still the right strategy at this time. 

Japan and the US and the EU are different situations and its not fair to compare the US and Japan as they are vcry much different economies and societies.

What might work in the US, and there is not assurance that what the US is doing is working at this point. might not might work in Japan and might even make the situation worse for consumers and businesses.

Article:

The BOJ's messaging on inflation has come under scrutiny since Kuroda recently drew criticism for saying households had become "tolerant" of rising prices.

Its rationale behind maintaining its monetary easing policy is that the target of 2 percent should be achieved in a stable and sustainable fashion, accompanied by strong wage growth.

The survey was conducted between May 6 and June 1, targeting 4,000 people across the nation aged 20 and older, of which 2,193 responded.

Ideas:

Consumers maybe are living with the higher prices but don't really like an increase in prices after years of de-flation and or low prices.

The idea of wage growth most likely is not going to happen anytime soon as companies are dealing with material cost and energy cost increases and have no room in their profits margins for increased wages at this time.

Perhaps if the yen was not so weak and energy and material costs were somewhat reasonable companies might consider increasing wages.

But that is a big "If" because they haven't increased wage for a very long time for whatever reason.

Have a nice and be safe!