Japan Economic View:

Article Source:  https://mainichi.jp/english/articles/20220930/p2g/00m/0bu/059000c

Article:

TOKYO (Kyodo) -- The Japanese government maintained its view that the economy is recovering moderately in its monthly report for September, but reinstated Friday its warning about financial market volatility after a sharp decline in the yen prompted it to intervene to support the currency.

Market fluctuations require "full attention," the Cabinet Office said, underscoring a heightened sense of vigilance about the negative economic impact of volatility that has sent the yen to its lowest level in 24 years against the U.S. dollar.

The office dropped its reference to movements in financial markets in August, when yen-selling pressure eased.

Ideas:

The economy overall might be recovery in a moderate fashion but there are probably many areas that are not yet at the pre-pandemic level.

Market fluctuations in the financial markets are nothing new but at the same time need to be monitored to ensure the markets don't go to far either way.

Market fluctuations are usually from reactions to something negative or something happening.

Markets and companies usually prefer markets to trend one way or another in a consistent so that they can change and prepare without too much up and down everyday or every week.

Article:

All assessments of key components of the economy, from exports to business investment and private consumption, were retained in the latest economic report.

Japan's economy grew at an annualized real rate of 3.5 percent in the April-June quarter and growth likely continued in the current quarter ending Friday, aided by the lifting of anti-coronavirus curbs.

"The economy is expected to show movements of picking up...as the transition to a new phase of the 'new normal' is under way," the Cabinet Office said in the report.

Ideas:

The annualized rate is usually just an estimate if the economy were to continue to grow like in the previous quarter. 

The challenge is there are not a lot of constraints such as high energy prices, raw material prices in increases a week yen which compounds increasing import prices.

And then there is the continued passing on of material and energy prices to the next in the supply chain which means that maybe the final consumer now has to pay even more and which of course means less consumer spending in the Japanese economy.

A new normal might be underway but it unclear at this time what does that really mean when many sectors are not back to the pre-pandemic level just yet.

Article:

"Full attention should be given to price increases, supply-side constraints, and fluctuations in the financial and capital markets," it added.

Economists expected a much slower pace of growth and rising prices of energy, food and other items, largely blamed on Russia's war on Ukraine, casting a pall over the outlook. The weaker yen has also boosted the cost of imported goods.

Aggressive monetary tightening to address inflation in major economies such as the United States could also slow global economic growth, a negative factor for the Japanese economy whose growth is driven by external demand. The monthly report said exports are "almost flat"

Ideas:

Full attention should have been given to these situations many months ago instead of waiting until after the July elections.

Small companies and families can't wait for the best political time to engage and manage he situations.

A slower growth rate doesn't mean all is not good as an economy is very complex. There might be some sectors that might be doing really good but of course some not so good.

The Japanese economy might appear to be driven by external demand by exports but much of the growth is still related to domestic production and consumption.

Exports are always important but they should not be the only economic driver for growth.

Article:

Private consumption is "picking up moderately," and business investment is showing "movements of picking up," the report said.

The yen's recent weakness against the dollar reflects the diverging monetary policies of the Bank of Japan and the U.S. Federal Reserve. A weak yen is often welcomed by exporters as it boosts their overseas profits in yen terms, but its role in increasing the cost of imports has come to the fore amid increased cost of living pressure.

Ideas:

Private consumption or consumer spending might be picking up now but if price increases continue it could be a major constraint in the Japanese economy in the future.

The same can be said for business investment, if prices continue to increase and they don't pass on some of their costs it could too be a constraint in the future.

There has to be some kind of balance with the  weak yen as it is a positive for exporters but also a negative for importers. So while it might help exporters it can be too weak to cause problems for importers.

And at the same time exporters might welcome the yen but if it becomes too weak it could cancel out all of the positives that exporters get from the weak yen, as their raw material and energy prices increase too.

Article

The government said consumer prices are "rising," after the core consumer price index excluding volatile fresh food items jumped 2.8 percent from a year earlier in August. The BOJ has reiterated its resolve to maintain its ultralow rate policy because such cost-push inflation cannot be sustained.

The Cabinet Office maintained its view on overseas economies saying that they continued to pick up moderately.

Ideas:

Consumer prices are probably going to continue to increase which means consumers, workers, and families if they don't see any wage increases to match the increase in prices there will eventually be less and less consumer spending in the Japanese economy.

Just what does the BOJ mean when is say cost-push inflation can't be sustained when maybe companies now feel they have no choice but pass-on some or all of their increased costs.

Companies can absorb only so much in increased costs before the have to make some changes.

Of course again one change they can't do or are not willing to do is increase wages at this time.

And of course that makes the situation even more challenging as again workers can't keep up with the inflation in their lives so they reduce their spending in the economy.,

Have nice day and be safe!

Japan Aug. Unemployment.

 Article Source: https://mainichi.jp/english/articles/20220930/p2g/00m/0bu/016000c

Article:

TOKYO (Kyodo) -- Japan's unemployment rate fell to 2.5 percent in August and the availability of jobs continued to improve for the eighth month in a row, helped by a recovery in the services sector as the economic hit from the COVID-19 pandemic receded, government data showed Friday.

The job-to-applicant ratio rose 0.03 point from July to 1.32 in August, meaning there were 132 job openings for every 100 job seekers, according to data from the Ministry of Health, Labor and Welfare.

Japan's economy has been recovering from the pandemic, with no antivirus curbs imposed by the government, though the nation struggled to contain a surge in newly confirmed cases in August.

Ideas:

Its good that the unemployment rate continues to go decrease and its good that more jobs in the services sector is improving, but as inflation continues to increase what kind of salaries are new employees getting in the services sector.

As many restaurants and other service type businesses are seeing their material and energy costs increase maybe some might not much room to offer good salaries their new employees.

And or they are really not hiring as many new workers as they want even though the overall unemployment rate is decreasing.

Most governments, except maybe China, have now taken the position to let the economies run as is without any more restrictions despite some new virus situations here or there.

Article:

Despite the decline in the jobless rate from 2.6 percent in July, the first improvement in four months, it remained higher than before the pandemic, with the job availability ratio yet to recover to a level seen before the outbreak.

"The data confirmed a recovery in the labor market is in place," said Megumi Wada, a researcher at the Daiwa Institute of Research.

"Although the number of job offers has been on the rise, the recovery in job seekers has yet to keep up with it. Restaurants and other service sectors struggled to secure labor even before the pandemic so we need to see whether the recovery will continue in those sectors as demand picks up," she said.

Ideas:

The jobless rate is probably going to remain higher than the pre-pandemic level for some time until all sectors are able to get back to the pre-pandemic level.

Most likely part of the challenge is the kinds of work people want these days and maybe they see restaurant type jobs as not as appealing compared to other jobs.

If at all possible services sector and or food service type companies need to offer salaries high enough to entice workers to work at their places. Of course restaurants and other places might not be able to afford a high enough salary at they are constrained due to high energy and material costs.

So restaurants are in a catch 22 situation. They know they need to entice workers with higher salaries but because of material and energy cost increases decreasing their profit margins they are not able to do it.

Article:

The hotel and restaurant industry marked the sharpest increase in job openings, up 51.1 percent from a year earlier, followed by a 28.9 percent jump in offers by entertainment, tourism and other service providers.

The total number of unemployed people dropped by 10,000, or 0.6 percent, from the previous month to 1.75 million on a seasonally adjusted basis, while those on payrolls fell 40,000, or 0.1 percent, to 67.30 million, the Ministry of Internal Affairs and Communications said.

Japan reported 690,000 people who left their jobs voluntarily for reasons such as seeking higher pay and better working conditions, down 8.0 percent from the previous month. Some 430,000 were laid off, unchanged from July.

Ideas:

The idea that 690.000 people left their jobs is not necessarily a bad thing. It could mean people see the job market as more fluid or more flexible and are willing to look for other work and even quite their jobs before they actually get a new job.

There is always going to be movement in the job market as people are always going to be moving around.

Maybe during the pandemic there weren't as many people moving around and as the pandemic as been decreasing maybe more people now feel the time is right to get a new job.

But as inflation continued to increase in the Japanese economy more and more people might decide to wait and try to find a new job later.

There could be many reasons why there were 430,00 laid off as they not have anything to do with the pandemic. It could be sector or market challenges. It could be specific company challenges, and of course inflation challenges.

Article:

The government has been seeking to restore normalcy to socioeconomic activity as much as possible, as vaccinations against COVID-19 progress.

But the surge in COVID-19 cases fueled by its seventh wave also prompted people to take time off.

The number of people temporarily absent from work jumped 100,000 from July to 2.68 million in August, including those who tested positive and close contacts who had to stay home, according to the internal affairs ministry.

Ideas:

Covid is still here and there are some people still getting it and as such many businesses might have challenges with employees here or there. 

The only thing companies can do is adjust the best they can to employees who get the virus. 

The unfortunately even those with three shots seem still get the new strain and many or most are not vaccinated to the new strain or even new strains developing.

This could be the new normal for business in the future as newer and newer strains come out of nowhere and companies just have to learn to adjust the the new environment as is.

And its not fair to some and say its just like the flu because for some even the flu is life-threatening.

Have a nice day and be safe!

Japan Restaurant Prices.

 Article Source: https://mainichi.jp/english/articles/20220921/p2g/00m/0bu/029000c

Article:

TOKYO (Kyodo) -- When Yoshihiko Koyama ordered a fried dumplings set meal at a well-known Chinese chain restaurant in Tokyo in September he noticed something different -- the price was a little higher than his previous visit.

Koyama was charged 710 yen ($4.9) instead of the 670 yen he usually paid for the set menu in a Hidakaya restaurant in the capital's Okachimachi district, illustrating how eateries and restaurant chains such as Hiday Hidaka Corp. are passing on soaring material and energy costs to consumers.

"It feels like a small increase but it's happening at other restaurants too," said 74-year-old Koyama who works in the jewelry industry in the area. "The cumulative effect can be huge."

Ideas:

A 40 yen increase might not seem much for some or most people, but its a very good example of even restaurants are passing on their costs to their customers.

The 40 yen increase is probably not going to turn away customers but if it were significantly higher some customers might think twice about going there.

Most likely the restaurant estimated just how much they can pass on to their customers without losing too many customers.

And yes, the cumulative effect can be huge or potentially be huge if you add up the price increases in all the little things everyday that consumers/customers might experience.

Suppose this person takes the train or bus to work, maybe there has been a price increase there. And then maybe he stops at Lawson, a conbini, for some snacks or something. And he goes to lunch and orders the 710 yen set, and then maybe on his way back to the store he stops at Daiso, and buys something and the price has increased on that item.

So now he is ready to go home and his wife asks him to stop by the local small supermarket and he busy a few small things but the price on them as increase too. By the end of the day he has paid more than normal as the price on many things has gone up even if a just a small amount for each.

Article:

Imported raw materials from cooking oil to flour have become more expensive on the back of the war in Ukraine and the yen's depreciation, which saw it hit a fresh 24-year low against the U.S. dollar in early September, adding to the pressure on consumers in the world's third-largest economy who are already struggling with higher prices for groceries and fuel.

Rising labor costs are also adding to the restaurant sector's woes as it has become more difficult to recruit staff since many eateries cut opening hours or closed temporarily amid the coronavirus pandemic.

According to a survey of 122 Japanese restaurant chains by private credit research firm Tokyo Shoko Research, 71 companies had raised prices or announced plans to do so this year as of early September. Of those, five chains had made such announcements twice, it showed.

Ideas:

So far the article doesn't mention the idea of menu items being downsized as a way to cut costs and save money, as it quite common in package items where a bag of chips or something is only have full and or the package itself has been reduce to save money but the price is the same or more.

Restaurants too probably have little tricks to reduce costs that many customers might not even notice, such as even using different raw material products that are a little less expensive.

If some or many restaurants laid off staff or cut hours and they lost a lot of employees maybe those same employees have moved on to other jobs and now restaurants have to recruit new staff and the only way to get new staff is having to pay higher salaries to get them to work there, which of course now becomes another cost restaurants have to deal with.

Most likely more than 5 chains have increased costs on some of their menu items more than once this year, if its just a small amount. The strategy of course is over time and little increase here and a little increase later where customers maybe don't even notice or don't and or they get used to the increase in prices over time.

Article:

Japanese restaurant chain Yayoiken, which operates more than 360 eateries nationwide, has been charging more for set meals and rice bowl dishes since September due to increased prices for imported beef and pork.

It is now offering its popular ginger pork set meal at 670 yen, up 30 yen, while the price of its pork cutlet rice bowl has been raised by 20 yen to 710 yen.

Diner chain Denny's raised the prices of some of its menu items such as pasta and steak by 10 to 80 yen from Sept. 6, saying, "It has become difficult to strike a balance between prices and quality" amid soaring material costs.

Ideas:

Many restaurants have probably looked into the idea of cheaper items but of course tying too keep the same quality of its offerings.

Companies are fully aware that any increase in prices might cause challenges for some or many customers, so again maybe they use the strategy of just increasing prices a little at a time and trying not to lose too many customers and or cause too much concern among its loyal customer base.

Again the cumulative effect could be significant it you add up all of the small increases related to every small thing or product that a consumer might buy each day or each week.

The small increases might not matter to many consumers and or they notice them but try not to worry too much but for some in the low-income groups or even the fixed income groups all of these small increases can seem huge to then if you add them all together.

Article:

The chain said, however, it was not increasing the prices of some of its popular dishes such as hamburger steak and desserts to retain customers.

Conveyor-belt sushi chain Sushiro has said it will raise prices at its restaurants from October to cover higher material, logistics and labor costs.

McDonald's Co. (Japan), curry restaurant operator Ichibanya Co. and Torikizoku Holdings Co., which operates a chain of "izakaya" Japanese-style pubs, have also passed on higher costs to consumers this year.

Ideas:

Restaurants and supermarkets know what are their best sellers and probably don't want to lose customers by increasing prices on those items, or maybe increase prices just enough to where customers don't seem to worry too much. They might not too worried if they don't sell as many but still hoping to cover costs.

Most likely there is a market leader or market leaders among the different groups in the restaurant industry and when the market leader increases it prices than others do the same thing.

Lets say Royal House is the market leader in their group and Denny's sees Royal House has increased its prices on some or many items, so Denny's and others within the family restaurant group will do the same to make sure they too can maintain there profit margins and cover costs.

And the same if McDonald's increases its prices and Mos Burger, Fresh Burger, and Lotteria see it too so they also will increase their prices at or near the same time.

Or the opposite strategy might happen, which is quite common as each place might have loss-leaders, meaning selling some items below cost to get more customers into the places of business, with idea the customers might buy something else besides the loss leader item.

Supermarkets have used this strategy a lot in getting customers into the stores and then with the wide array of products they offer customers will not only buy the loss-leader item but then add more products to their baskets before checking out.

Article:

Wu Haokai, a student from China who is enrolled in an MBA program at J.F. Oberlin University in Japan, said that as he supports himself with a part-time job, he is concerned the recent price increases will add to his financial burden.

"It worries me that those restaurants I often visit are raising prices," the 25-year-old said. "It's hard to cut back on the frequency of eating out as I enjoy doing so with my friends."

With a growing number of restaurants forced to increase prices, many in the sector are anxious about losing customers.

Ideas:

Most likely Japanese consumers and others have become too used to the lower prices in Japan. The challenge doesn't seem to be the 10, 20, 50, 70 yen increase here or there on many items but the real challenge is wages have not kept pace with inflation and some or many items as consumer are seeing the cumulative effect of all of the increases on products.

Another problem might be as energy prices, raw material prices increase companies might begin to cut back on the hours of their part-time staff as a way to reduces costs.

Because of Japanese labor laws maybe they can't lay them off or fire them but they can reduce the hours of their workers especially part-time workers and contract workers.

The challenge is not that restaurants are going to or potentially going to lose some customers but many related to the services sector might begin to see a decrease in customers and even how much they spend as inflation continues on in Japan.

All of this will have, again, a cumulative effect on many sectors and areas in the Japanese economy especially anything related to services, or anything where consumers use their extra or disposable income to spend here or there or even if they have a budget for such items their budgets are not able to buy as much as before.

Article:

While Skylark Holdings Co., the operator of the Gusto restaurant chain, is feeling the negative impact of price increases implemented in July, it said it may raise prices again if it cannot absorb higher costs.

"Customers are becoming increasingly cautious about their budgets," Skylark President Makoto Tani said. "Our customers are decreasing, especially in rural areas."

The company said in August that it plans to close about 100 of its group restaurants due to rising costs.

Ideas:

Households and consumers only have so much extra income or disposable income to spend on things outside of the home and as that extra income becomes less and less as prices increases on many items in the Japanese economy, unfortunately some companies and businesses are going to be challenge with less customers and or customers not spending as much as before.

So its a two-edged sword in the economy. Companies are feeling the challenges of increased material costs and energy cost increases and need to increase prices as they no longer can continue to absorb the costs.

So they increase prices knowing they are going to maybe customers because of it but they have no choice, and then customers, being challenged with less extra income have to make a choice on what to spend on the remaining extra income they now have.

So then, again unfortunately, companies begin to maybe reduce the hours of some of its workers, as a way to reduce costs, as sales continue to decrease over time.

Article:

Shun Tanaka, a senior analyst at SBI Securities Co., said, "A  lot of people became accustomed to buying ready-made food at supermarkets or cooking at home instead of eating out during the coronavirus pandemic."

If restaurants cannot offer added value such as better ingredients, they could lose customers, he said. "Demand has not recovered yet. We might see more restaurant closures in the future."

Ideas:

There are always positives and negatives in an economy at any time as there are many things happening all at once. What is a positive maybe now for supermarkets of course is maybe not a negative for restaurants as consumers buying habits have changed to buying more take-out items at supermarkets and not going to restaurants as much.

Restaurants now have to find ways to lure customers back to their places of business but its going to be a real challenge as they too now are increasing their prices and again consumers only have so much extra income and or most consumes going to a restaurant these days might be seen as not a necessity.

So restaurants are in a very challenging position as they increase prices and must have something that customers want.

Demand might not recover any time soon and maybe might get worse as inflation continues to increase in Japan.

Some might say, if possible, restaurants and other service type companies re-set their expectations for the future because of higher material and energy costs and as the same time less customers because of inflation in the Japanese economy.

Have a nice day and be safe! 

Japan Food Prices:

 Article Source: https://mainichi.jp/english/articles/20220921/p2a/00m/0bu/012000c

Article:

TOKYO -- Price increases for food items as well as utility bills that are closely linked to people's daily lives are set to peak in October in Japan.

Price rises in October are expected for over 6,500 food items, as well as gas bills and fire insurance premiums. As the consumer price index rose in August at a high rate not seen in some 31 years, there is mounting concern over whether household finances and the Japanese economy can endure the autumn price hikes.

Ideas:

Of these 6,500 food items, how many of them already had a price increase for example last winter, last spring, or in the summer, as prices continue to increase and companies feel they need to keep increasing prices as prices continue to increase and they need to maintain their profit margins.

All of these price increases become a synergistic effect meaning it doesn't just effect one area of an economy it begins to effect everything, every sector in an economy.

There is a limited supply of money that is always moving around in an economy, and as such as one area/sector begins to have challenges it might be a challenge for other sectors or or other areas in an economy.

Ass prices keep increasing, and as the disposable income of families begin to shrink they begin to think how to strategically use their scare disposable income. 

So they see prices increasing at restaurants so they limit the times they do to out to eat at restaurants, and as prices and they see the prices of take-out food has also increased they limit the number of time they might get take-out food.,

So the mother goes to the supermarket and sees even her normal food choices have increased so she either looks for good substitutes at a good price or limits what she buys.

And then she looks for something even on line at Rakuten or Amazon Japan, or some other online shopping platform and she sees the same thing.

And then the family might want to go on a trip and tries to use the new travel program which helps with the hotel cost, but everything else about the trip is just too expensive for them to take a trip at this time.

And it continues on in the economy with many families and individuals, and as such many sectors are effected and lose out with less overall spending in the economy.

Article:

Kewpie Corp., which will implement a 2 to 20% price increase for 93 items, including mayonnaise, to be shipped from Oct. 1, released a statement saying, "Under tough circumstances, the company as a whole has worked to streamline operations and curtail expenses, but it is extremely difficult to absorb cost rises through the company's efforts alone. We decided that we have no choice but to alter prices."

NH Foods Ltd., Itoham Foods Inc. and Marudai Food Co. will also raise prices for ham and sausages for industrial and home use from Oct. 1. Meanwhile, the four major beer producers in Japan were quick to announce as early as between April and June that prices will be increased by around 10% for beer, canned shochu and other products from Oct. 1.

Ideas:

So companies are strategically increasing prices and at the same time trying to be more productive in how they do things to see if they can reduce costs too.

What is not been said is related to employees. In western companies sometimes, unfortunately, the first cost cutting measure is the reduction of employees. But as Japanese companies find it a challenge to layoff workers, maybe most workers are safe from the western strategy of employee cost cutting to reduce costs and maintain profit margins.

Unfortunately maybe for some even a 2 to 20 percent or even a 10 percent increase for some products might be too much and maybe, if they can, they search for substitutes at a lower price, if there are any.

As inflation is still very much an individual thing, meaning the price increases might effect each person or each household differently depending on what like and what they buy it can't always be assumed that the price increases effect everyone the same.

Article:

Conveyor belt sushi chains Kura Sushi Inc. and Akindo Sushiro Co. have also announced price revisions from Oct. 1, as part of sudden moves within the restaurant industry. The wave of price hikes starting Oct. 1 has been spreading throughout various sectors.

According to a Teikoku Databank Ltd. study targeting 105 food companies, price increases are expected for over 6,500 items in October, a sudden peak compared to earlier periods of 2022, when price rises were seen for up to around 2,500 items at the most per month.

"October is the start of the fiscal year's latter half. It can be thought that one reason behind the October price hike is that it is easy to make adjustments with clients and affiliated parties," a Teikoku Databank representative commented. They added, "There also seems to be the aspect that companies are conscious of the high demand season."

Ideas:

Most likely many companies such as the sushi companies did estimates on just how much they can increase prices and not lose all of their customers. So they strategically estimated a 5 percent or 2 percent or 10 percent increase will maintain their customer base and at the same time reduce their expenses and maintain the current profit margins.

So just what is considered the high demand season? Is it the beginning of the soon holiday season which includes a lot of companies parties, end of year celebrations, including the traditional gift giving period in Japan at the end of the calendar year?

Or are they making the price increases now just before the high-demand season begins as during the holiday period there are going to be be a lot of demand and some companies want to take advantage of the increase in demand as a way to makeup for the losses of the previous two years.

Article: 

For example, summer is the busy season for beer and beverage manufacturers. If they adjust the period of price rises to October, they can avoid a situation where buyers and consumers stop making purchases during the high demand season. On the other hand, processed food products are popular during the winter. It can be said that by raising prices ahead of the season for hot pot items, companies are trying to cover for rising raw material costs by increasing product prices.

Following the price hike peak in October, price rises would have been implemented for over 20,000 food items since the beginning of this year. "In addition to cooking oil and other ingredients, costs of packaging material, containers, logistics equipment, and other items have been rising. This year, price rises have been occurring for most food items and beverages," said the Teikoku Databank representative. As the average price increase rate has reached 14%, family finances are under a major strain.

Ideas:

So companies are very aware when is the best time to increase prices as beer and beverage companies recognize increasing the prices in the summer instead of October might have seen decrease in sales while in October they might not see a big decrease.

And then companies that supply hot pot items they are going to increase prices just before the demand for those kinds of product begin to increase instead of increasing prices during the hot pot season.

Companies obviously know when is the best time to increase prices which maintains there customer base and at the same time keeps their profit margins in the black.

And again maybe a 14 percent increase might not be big deal for some and they see the price increases but they are not stressed too much but for some or many even a 14 percent increase might be too much and again they begin to cut this or reduce this or this reduced spending begins to effect many sectors in an economy.

Article:

Mizuho Research & Technologies Ltd. calculated estimates on the burden imposed on household finances, assuming that the yen will continue to hover in the 145 yen zone against the U.S. dollar. It estimated that each household in Japan will shoulder an increased burden of over 100,000 yen (about $700) per year due to price rises. The institute found that even when factoring in the effects of the government's countermeasures against higher prices, family finances will shoulder an extra 82,000 yen (about $570) per year. Of this increased burden, about half, or 39,000 yen (approx. $270), is the result of increased food prices, while rising energy prices, including electricity and gas bills, as well as gasoline expenses, can be attributed to the estimated extra household finance burden of around 34,000 yen (roughly $240).

Ideas:

So it looks like there are some very good estimates here regarding just how much inflation is going to effect households within a year.

Even if it is 100,000 yen or 82,000 yen that might be too much for some families as maybe some are living paycheck to paycheck. And for those on fixed incomes or low income groups a loss of even 82,000 yen might be too much.

For low income groups or fixed income groups even 39,000 for food items is too much as low income and fixed income groups spend a larger percentage of their income or disposable income on food than higher income groups.

And then add in the increased estimates related to energy prices and now there is even less disposable income to use outside the home other things in the Japanese economy, which again means less for every other sector in the economy. 

In this situation disposable income would mean after the food bills, and home energy bills, and other household expenses are paid the amount left over to use in the economy outside the home.

Article:

Saisuke Sakai, chief economist of Mizuho Research & Technologies, pointed out, "The primary cause of the current hike in prices is the rising costs of daily necessities, including food and energy prices. This is directly leading to an increased burden on family finances." He commented, "It is certain that the tendency to cut down on expenses will grow stronger among consumers, especially low-income individuals who will be careful to avoid nonessential and nonurgent spending."

While households are feeling the pinch from surging prices, domestic wage levels remain stagnant. It seems that rising costs will deter consumer spending, which had finally been showing signs of recovery since the coronavirus outbreak.

Ideas:

So yes, low-income groups are having the most challenges as they always have less resources to cover the surge in prices.

But the surge in prices will most likely effect the middle class or middle-income groups too as maybe they have more expenses to cover compared to the lower-income groups such as high car payments, high house or mortgage payments, child in university tuition payments and so on.

So again every group but maybe the higher-up income groups will deter or reduce spending on many things which is going to have an effect on the overall economy.

Consumer spending has always been the weak link in the Japanese economy as Japanese consumers just don't spend like their western counter-parts. For example in many economies consume spending is upwards of  60 percent or more of GDP but in Japan might only be about 50 percent of GDP.

So even though as the pandemic has been winding down and Japanese consumers are out more and more and maybe spending more than before the continued increase in prices will eventually begin to have an effect on consumers and again spending might be less than expected or wanted by the Bank of Japan.

Have a nice day and be safe!