Japanese Govt. and Prices:

 Article Source: https://mainichi.jp/english/articles/20221001/p2a/00m/0op/007000c#cxrecs_s

Article:

Prices of food and other essentials are continuing to rise in Japan, and the government must quickly devise measures to protect the livelihoods of those in need.

Bottled beverages, beers and mayonnaise are just a few among the many items seeing price hikes, while eateries are also rushing to raise the menu prices for hamburgers, beef bowls, doughnuts, and so on.

According to Teikoku Databank Ltd., prices for some 6,500 food items will rise in October, a record high so far this year. By the end of the year, the figure is expected to top 20,000 total.

Japan's inflation rate hit 2.8% this past August, the highest in roughly 31 years due to soaring prices of global food ingredient, oil and other items coupled with the yen's sharp depreciation. Some observers speculate that the inflation rate will reach 3% before long.

Ideas:

For some consumers, while they see and feel the increases in prices, the price increases might not be too bad for most consumers other than limiting their extra income spending.

But for some, such as low income consumers and fixed income consumers the prices increases might not be too much for them as they usually spend a larger percentage of their income on daily necessities than those in other income groups.

But at the price increases continue to increase even the middle income groups will begin to feel the prices increases even more.

The question is how much and when should the government intervene in a market economy to reduce the stress on consumers.

There are always positives and negatives whenever a government intervened, as sometimes one part of might be positives with the intervention and another part negative before of the intervention.

Article:

Rising inflation has taken a heavy toll on households, with each facing an estimated 70,000 yen (about $484) in higher food bills over the course of a year. With power and gas rates also jumping, low-income households are getting hit especially hard.

The government has drawn up a set of anti-inflation measures including a 50,000-yen (about $345) cash handout to low-income households exempted from residential taxes, and is set to hammer out a new economic stimulus package. Prime Minister Fumio Kishida has vowed to "make an all-out effort to address current price surges," and is set to work on easing the impact of spiraling electricity charges.

Some within the ruling parties have insisted that upwards of 30 trillion yen (approx. $207 billion) is necessary to counter spiking prices. Yet given Japan's cash-strapped finances, the government must steer clear of pork-barreling in the name of tackling the problem. Now is the time for the government to exercise wisdom to devise truly effective policy measures.

Ideas:

An increase of 70,000 yen is not good but for many for many its still doable. But of course now add in power and gas and is becomes less doable.

And for the income groups the 70,000 might be way too much and and then add in power and gas increases and become even more stress.

What now they low income groups begin to cut back on needed daily necessities, including buying healthy food, medicines , needed extra clothes and so on.

A 50,000 yen cash handout sounds good except it won't go very far if its only a one time subsidy. That buy cover a weeks worth of food but it might not cover much the rest of a month.

The cash handout, which if done correctly, maybe should be done monthly, for low income groups to the ease their stress.

Then of course there is the idea that maybe the government debt will increases too much because of the cash handouts.

Article:

It is imperative to establish a safety net for Japan's needy. Assistance for food banks and "children's cafeteria" soup kitchens, which provide free meals to families with small children, should be expanded. It will also be effective to further tap the government's rice stockpile.

On the business front, it is essential to steadily raise wages to weather prolonged inflation. Major Japanese companies are generally enjoying strong earnings, though the situation varies among businesses. Firms that have seen their overseas earnings swell due to the falling yen should aggressively raise regular pay and bonuses.

Ideas:

LIke during the pandemic now is not the time to be concerned about increasing the government debt because of government programs to help the needed. Whatever can be done should be done regardless of politics.

Government programs should be done with a little paperwork or red-tape as possible to make sure all in need have get help.

Even the idea of free rice to those in need if the government has large stockpiles to use.

Of course the main challenge is to get companies to increase wages. Of course many companies are not doing too good because of energy, raw material cost increases not to mention some or many are not yet the pre-pandemic level yet. 

But there are probably many that are just sitting on huge sums of money and should use it to increases wages for their employees.

Article:

To facilitate wage hikes among small- and mid-size firms, meticulous government support is indispensable. It is necessary to step up monitoring of major corporations to allow subcontractors to reflect rising costs in their delivery prices.

If pay hikes spur increased consumption, it will help improve corporate performances, leading to further pay rises. The government is called on to put together measures to kick this positive cycle into gear.

Ideas:

Another problem is companies might have huge sums available to increase wages but they might be constrained because they have to pay their shareholder dividends and as such shareholders are more important than their workers.

Another problem might be market power in that major corporations, use their power to limit how much subcontractors are allowed to increase costs. If they increase the delivery or other costs too much the major company might cut off the subcontractor and then look for subcontractors who meet their delivery prices.

If and when there are pay hikes and consumers/workers begin to feel good about pay hikes, if they are high enough, there is no doubt it will improve consumer spending in the Japanese economy.

But companies have to be convinced or persuaded that increasing wages is a future investment for the good of the company, for the good of their workers, and for the good of the overall Japanese economy.

And the same for all companies as it becomes a  multiplier effect in the overall economy as  more and more companies increase wages, more and more consumers see the positive effects and more and more consumers begin to spend and then spreads into all areas in the economy.

Have a nice day and be safe!