Tokyo Consumer Prices:

Article Source:

https://mainichi.jp/english/articles/20221121/p2g/00m/0bu/032000c

Ideas:

Consumer prices are increasing which means consumers are losing extra income and or not able to do much else as they continue to cut back on extra spending

The Japanese economy, in regards to consumer spending, is not going to see much growth in the 4th quarter or even in the 1st quarter of 2023.

The sharp depreciation of the yen has made price increases even more apparent with no end in sight for price increases.

It must be remembered that the Bank of Japan’s 2 percent inflation target is really aimed at consumer demand and consumer spending and not related so much to wholesale price increases.

Most likely the 2014 and 2019 sales tax increases were just as difficult on consumers as the 1989 3 percent sales tax increase.

The Bank of Japan might be correct in keeping its ultralow rate as there are many side effects to a higher rate which could cause even more challenges to the Japanese economy

As the US and the EU increase their rates the variance between the US dollar and the Japanese yen becomes wider and wider.

Governor Kuroda might be right but tell that to the average business owner or the average consumer who has to live through the high inflation.

Consumer sentiment is everything as if consumers don’t feel good about the economy, don’t feel good about prices, or don’t feel good about their wages they are not going to do much extra spending in the economy.

Pent-up demand will only last so long as households feel the reality of the higher prices related to inflation.

As energy prices increase along with electricity and gas prices along with food prices that means less and less extra income or disposable income available for use on other things in the economy including dining out at restaurants, buying extra things on Japan Amazon or Yodobashi Camera for example.

Gasoline prices might have decreased 0.8 percent but that is just a drop in bucket for consumers who need extra relief from continued inflation.

City gas prices and electricity prices increased 33 percent and 26 percent respectively, and again, less and less disposable or extra income for other spending in the economy.

Just because the current inflation is not backed by wage growth or strong domestic demand, as the BOJ says,, should be reasons alone for the BOJ to do something to help businesses and consumers.

Commodity prices are not the fault of businesses or consumers yet the Bank of Japan doesn’t seem to take that into account as the Bank of Japan keeps saying they are only temporary and will not last forever.

Have a nice day and be safe!