Japan Small And Medium-Sized Biz, No Wage Hikes:

 Article Source:

https://mainichi.jp/english/articles/20230128/p2a/00m/0bu/022000c

Article:

TOKYO -- Thirty-two percent of small- and medium-sized businesses in Japan "will not" or "cannot" implement wage hikes anytime soon despite Prime Minister Fumio Kishida's call for increases, a recent survey conducted by an insurance firm has revealed.

Daido Life Insurance Co. on Jan. 26 announced the results of its survey targeting the managers of some 9,000 small- and medium-sized companies nationwide. Although raising wages is a cherished policy of the Kishida administration, the survey indicated that many businesses are unable to do so as they are suffering from rising procurement costs due to the historical weak yen and high commodity prices.

Ideas:

It's not a surprise that small and medium sized business say they can't or will not implement wage increases in April

The inflation situation most likely has hit small and medium sized companies harder than larger companies that have more resources to ward off some of the inflation challenges.

Small and medium sized companies don't have the resources and as such are more prone to shocks or continued challenges that big companies are able to withstand.

Bigger companies also have the advantage of better supply chains which help them with lower cost resources that small companies don't have.

The Kishida administration shouldn't punish the small companies that don't have a choice and they profit margins are just to thin for wage increases.

At the same time small and medium sized companies should be given subsidies related to energy and raw material cost increases.

Article:

The survey was conducted in December 2022. Thirty-four percent of the respondents answered that they "plan to raise wages (including those who have already done so)." In contrast, 18% said they "will not implement" wage hikes, while 14% said they "intend to raise wages but are unable to do so."

When asked about the specific rate of wage increases, "2% or higher but less than 3%" accounted for the largest percentage, at 28%, followed by "less than 2%" at 25%. The most common reason given for not being able to raise wages, with multiple answers allowed, was that "the economic outlook is uncertain," at 69%. By industry, 42% of the respondents in the manufacturing industry expressed their intention to raise wages, while only 23% of the respondents in the retail industry did so.

By size, 55% of companies with 21 or more employees responded that they "intend to raise wages," while only 20% of businesses with five or fewer employees said so.

Ideas:

A 2 percent increase in wages probably is not really enough for a household to reduce their inflation costs but its better than nothing. 

At a 2 percent wage hike many households are still going to see their disposable income less that the cost of inflation. Which means they will continue to not be able for things other than their daily necessities over time.

Manufacturers are probably in a better position to offer wage hikes while those in retail are limited as maybe consumers with their limited extra income are refraining from shopping that much.

Perhaps again small and medium sized companies should be given some kind of subsidy as a way to reduce their energy and raw material cost and that way they can maybe find a way to provide wage hike for their employees.

The subsidies can be done at least until inflation begins to flatten out and or stops increasing and small and medium sized companies can rebuild their profit margins to the point of being able to provide wage increases to their employees.

Have a nice day and be safe!

Tokyo Core Consumer Prices:

Tokyo Core Consumer Prices

https://mainichi.jp/english/articles/20230127/p2g/00m/0bu/014000c

Article:

TOKYO (Kyodo) -- Core consumer prices in Tokyo rose 4.3 percent from a year earlier in January, hitting the highest level in nearly 42 years, as widespread price hikes in food, energy and other items deal a blow to households, government data showed Friday.

The core consumer price index, excluding volatile fresh food items, for the Japanese capital remained above the Bank of Japan's 2 percent inflation target for the eighth straight month and adds pressure on the central bank to tighten monetary policy. The pace of increase accelerated from last month when the inflation rate was 3.9 percent.

Core CPI for Tokyo, seen as an indicator of what to expect nationwide, was up for the 17th straight month and marked the highest since a 4.3 percent rise in May 1981, the Ministry of Internal Affairs and Communications said.

Ideas:

Most likely those how live in Tokyo and surrounding areas also have the highest salaries in Japan. But even though they have high salaries there must be a considerable number in Tokyo who are feeling the inflation challenge.

By now consumers must be thinking when is inflation going to decrease or at least level off as it seems there is no end in sight for the Japanese economy and price hikes.

As long as there are no wage hikes consumers have no choice but to reduce their extra income or disposable income spending which is not good for the Japanese economy.

But the Bank of Japan most likely is not going to do much as they to feel that the current strategy is the best strategy for now.

Article:

An increasing number of companies have been passing on higher costs of energy and raw materials, stemming from Russia's war in Ukraine and the depreciation of the yen, to consumers in recent months.

In the reporting month, the prices of food other than perishables and of energy costs rose 7.4 percent and 26.0 percent from a year earlier, respectively. City gas surged 39.7 percent and electricity was up 24.6 percent.

The overall gain in core CPI came despite lower accommodation prices which fell 2.8 percent amid the government's subsidy program aimed to boost the tourism sector.

Ideas:

If the yen was a normal level, its possible the higher costs that companies are passing on to the next in the supply chain, but unfortunately the weak yen makes the energy and raw material costs even more as now imports prices become higher with a weak yen.

The Bank of Japan has got to be under a lot of pressure to decrease inflation but the BOJ doesn't seem to be worried about it too much. 

But of course consumers are feeling it everyday and having to live through it while the BOJ seems to think the current inflation is only temporary situation. 

Article:

At the latest monetary policy meeting in mid-January, the BOJ left its ultralow rate policy unchanged, a month after its surprise decision to raise its ceiling on the 10-year yield to 0.5 percent from 0.25 percent, a move considered an effective interest rate hike.

It says ultralow rates are still needed to prompt companies to raise wages and to spur stronger demand to support price increases.

Ideas:

Some companies might increase wages while some companies probably can't such as small and medium sized companies who don't have the needed profit margins to increase wages for their employees.

Some have said the ultralow strategy used by companies is a strategy that is an incentive for companies to "use their money/savings or lost their money" strategy as the low rates also involve company bank accounts too.

But companies for now have not responded the the strategy used by the Bank of Japan.

Only time will tell if companies will increase wages in April for their workers.

Have a nice day and be safe!

Japan Convenience Store Sales:

 Article Source: https://mainichi.jp/english/articles/20230120/p2g/00m/0bu/052000c

Article:

TOKYO (Kyodo) -- Convenience store sales in Japan rose 3.7 percent from a year earlier to a record 11.2 trillion yen ($87.2 billion) in 2022, helped by the first increase in customer visits in four years amid eased COVID-19 restrictions, an industry body said Friday.

The same-store sales of seven major convenience store operators grew for the second consecutive year, thanks to robust sales of items such as boxed lunches, rice balls, frozen food products and soft drinks, according to the Japan Franchise Association.

The number of customer visits was up 0.9 percent at 15.8 billion, though the figure was still short of the pre-pandemic level in 2019.

Ideas:

Probably the increase in sales at convenience stores is more related to inflation related to the increase in prices at restaurants, supermarkets and so on.

I don't think you can equate an increase in international tourists as a reason for the increase in convenience store sales.

But the first paragraph is a little unclear as what does "the first increase in customer visits in four years" but it might be foreign visitors but not sure.

The number of customer visits is still impressive at 15.8 billion which means they might have been multiple visits by some customers.

Article:

Together with the higher number of shoppers, sales growth was driven by a record average spending per customer of 711.50 yen, an increase of 2.8 percent.

An official at the association said that the record sales reflect consumer behavior of seeking to buy before prices rise for more products.

Sales were boosted as buying daily necessities in bulk at one location, which became popular under the coronavirus restrictions, has become a long-term trend, according to the association.

Ideas:

Convenience stores have become an important component for the buying of daily necessities as maybe inflation is forcing some customers to seek out lower prices at convenience stores compared to other retail outlets.

Convenience stores used to be just for convenience or limited time shopping but it seems now they are a major shopping location for many trying to find more convenience and lower prices.

And as convenience stores improve their stores offerings they might be on-par now with other retail outlets related to the buying of daily necessities and even other products.

But of course they will never replace the traditional supermarket but has never been an convenience stores strategy to completely replace supermarkets, but they have done a very good job of creating niche markets.

Article:

The gain in sales was also contributed to by the National Travel Discount program, started by the government in October to help revamp domestic tourism, the association said, adding that convenience stores have developed and offered new products that cater to the increased turnout.

In December alone, sales were up 3.9 percent from the same month in 2021 at 1 trillion yen on high demand for Christmas-related food items such as cakes and chicken.

The number of the overall convenience stores in Japan stood at 55,838 at the end of 2022, falling for the first time since the end of 2019.

Ideas:

As tourists/customers move around Japan, they of course are looking for time-saver opportunities and diverse products that might not be offered in traditional supermarkets.

But at some point, as with any market situation, there might come a point that the convenience store market becomes saturated or too many for the Japanese domestic market.

But the decrease in number of stores might not be related to saturation but more about the pandemic or a combination of factors.

It will be interesting to see what just 2023 brings related to more sales or less sales more stores or less stores.

Have a nice day and be safe!

Japan Core Consumer Prices:

 Article Source: https://mainichi.jp/english/articles/20230120/p2g/00m/0bu/010000c

Article:

TOKYO (Kyodo) -- Core consumer prices in Japan gained 4.0 percent in December from a year earlier, the highest level since 1981 and twice the pace envisaged by the Bank of Japan, as higher food and energy prices increasingly squeeze household budgets, government data showed Friday.

The core consumer price index excluding volatile fresh food items was above the BOJ's 2 percent inflation target for the ninth straight month, underscoring persistent inflationary pressure despite the central bank's view that it is only transitory.

In 2022, the core CPI gained 2.3 percent from a year earlier, the Ministry of Internal Affairs and Communications said, the fastest pace since 1991, when the effects of past consumption tax hikes are stripped away. The key gauge of inflation rose for the first time in three years.

Ideas:

Not to disparage the Bank of Japan but sometimes estimates or forecasts are not what a forecaster expects. It's very difficult to estimate what might happen so consumer prices gaining 4.0 percent in Japan is not be a surprise with the weak yen.

But even the highest inflation since 1981 its still not so good for the Japanese economy overall.

Households or consumers might be thinking when is it going to end when is inflation going to stop or at least level off.

The Bank of Japan's 2.0 percent inflation target is more about consumer spending and consumer demand which now is not so good maybe because of the continued increase in inflation.

The Bank of Japan might still think inflation is transitory or temporary or short-term but the average household or consumer might not think that way as they have to live through it everyday.

Article:

The latest data came after the BOJ on Wednesday resisted market pressure to change its ultralow rate policy, a month after its surprise decision to raise its ceiling on long-term government yields jolted financial markets. The central bank expects core CPI to hit 3 percent in the year to March but undershoot its inflation target thereafter.

Still, price hikes have been prevalent in Japan, known for its past experience of years of chronic deflation, as companies face increased pressure to pass on higher raw material and other costs to consumers.

Marking the fastest pace in over 46 years, food prices jumped 7.4 percent in December. The prices of everything from hamburgers and potato chips to chocolate and mayonnaise rose.

Ideas:

The Bank of Japan continue to resist pressure the change its policy as it feels its the best strategy for the Japanese economy at this time.

The Bank of Japan inflation target is not so much about overall inflation but about consumer spending and consumer demand,which because of inflation is not where they should be.

Yes, companies have been increasing prices but maybe consumers haven't been good about the increase in prices and might be cutting back on overall spending and or looking for substitutes related to the products they usually buy.

Companies have no choice now as their profits margins continue to shrink which means they now have to pass on their price increases after being reluctant for many years.

Article:

Energy prices surged 15.2 percent. Electricity and city gas continued to see double-digit growth, up 21.3 percent and 33.3 percent, respectively, the data showed.

The government plans to reduce utility bills starting this year to ease the burden on households. After crude oil prices surged amid Russia's war in Ukraine, government subsidies to oil wholesalers to bring down retail prices have helped limit the gains in gasoline and kerosene prices, which increased 1.6 percent and 4.7 percent, respectively.

"The impact on CPI from higher energy prices was large in 2022 but contributions from food prices are now bigger," a government official said.

Ideas:

The Japanese government maybe last year should have reduced utility bills and inflation related to electricity and so has been increasing for over a year now, which means the average household disposable income or extra income has been deceasing for over a year.

Subsidies the oil and energy wholesalers shouldn't be a one time subsidy but should be a constant rolling subsidy as energy prices continue to increase.

For some groups such those on fixed incomes or low income groups the increase in food prices are probably hitting them the hardest as they pay a larger part of what they have in food and daily necessities.

Article: 

Nearly 7,400 food items are expected to see price hikes by April, of which 4,283 are planned for February, according to a recent survey by research firm Teikoku Databank Ltd.

"Inflation is accelerating at a much faster pace than wage growth and the very items that people buy frequently, such as food, are becoming more expensive. The hit to consumers is much bigger than what the headline CPI figure suggests," said Yuichi Kodama, chief economist at the Meiji Yasuda Research Institute.

In a sign of recovery in the services sector that was hit hard by antivirus curbs amid the COVID-19 pandemic, services prices rose 0.8 percent in December.

Ideas:

In Japan companies have been reluctant to pass on their costs to the next in the supply chain which could be the final retail customer, but after months and now a year or so on constant inflation maybe now companies feel they have no choice as the profit margins continue to decrease.

Consumers again might be thinking when is inflation either going to slow down, level off, or even begin to decrease overall.

Of course a lack of wage growth in the Japanese economy has not helped as employees continue to feel the effects of inflation with no wage increases.

An increase of service prices of 0.8 percent might indicate that the services sector is increasing prices as they are trying to make up for the loss of  revenue over the pandemic period.

Article:

Compared with the price trends for goods, however, the increase was still modest and economists say whether price hikes will spread to the services sector, accompanied by robust wage growth, is a key factor to watch when ascertaining if the BOJ's 2 percent target can be attained "in a stable and sustainable fashion."

Core-core CPI, which excludes both energy and fresh food items, rose 3.0 percent, a level unseen since 1991.

The recent bout of inflation has complicated the BOJ's efforts to persist with its ultralow rate policy that has weakened the yen and inflated import costs for resource-scarce Japan.

Ideas:

As other sectors see increases in inflation the services sector related to hotels and so on might be somewhat reluctant to increase prices too much as inflation might be limiting the growth of sales and revenue, which some parts of the services sector might be considered a luxury or extra spending as households are reluctant to spend more.

Wage growth is a key for the Japanese economy to get back to some kind of normal as a lack of wage growth is going to constrain economic growth.

The weak yen has is a challenge for the Bank of Japan and it policy but maybe as they have said in the past the Japanese economy is too fragile to increase the key rate has the US Federal reserve as done but without much success.

Article:

Markets have been rife with speculation that the BOJ will further tweak its policy, with eyes on who will succeed Haruhiko Kuroda, the current governor whose term will end in April. The yen has rebounded from its rapid fall against the U.S. dollar last year to its lowest point in three decades, partly because of expectations of a policy shift.

"Unless the yen weakens further and crude oil prices surge, we can expect the rise in CPI will become moderate later this year," Kodama said. "There are emerging signs of a change in how people see inflation, but I'm still not convinced whether it can be sustained over the longer term."

Ideas:

A new governor for the Bank of Japan might keep the same ultra low policy as but it hard to determine at this time.

The yen might have rebounded some but its still a challenge for importers and import prices.

The CPI might see a moderate increase but what does that mean to the average consumer in Japan. Most likely when they see their utility bill and or when the go to the local supermarket they don't check to see if what the CPI says.

Some groups or some consumers might be thinking that the increases in inflation is really not a big challenge to them but the are probably some or many how feel the constant pressure of inflation and constantly related to energy costs and or even using or thier extra income for other things besides daily necessities. 

Have a nice day and be safe!

Japan Trade Deficit:

 Article Source: https://mainichi.jp/english/articles/20230119/p2g/00m/0bu/014000c

Article:

TOKYO (Kyodo) -- Japan ran its biggest annual trade deficit of 19.97 trillion yen ($155.27 billion) in 2022, as higher energy and raw material prices along with the yen's precipitous fall boosted import costs, offsetting growth in exports as the impact of the COVID-19 pandemic waned, government data showed Thursday.

The value of imports jumped 39.2 percent to a record 118.16 trillion yen, led by crude oil, coal and liquefied natural gas, while exports grew 18.2 percent to 98.19 trillion yen, also a record high, due to increased shipments of cars and steel, the Finance Ministry said in a preliminary report.

The annual deficit of 12.82 trillion yen reported in 2014 was previously the country's largest. Comparable data became available in 1979.

Ideas:

A economy has both positives and negatives. And here we we the negatives of a higher import volume and and positives of higher export volume.

A 19.97 trade deficit, while not so good might not be that much of a dent into the Japanese current account, as Japan before the pandemic had many months and years of a trade surplus.

A weak yen helps exporters but doesn't doesn't help the domestic economy. Even at an 18.9 percent increase in exports, it clearly shows Japanese products are still selling on the global market.

Unfortunately the weak yen and the high import prices are gaining more attention than the record export level.

Article:

The record red ink underscores the vulnerability of resource-scarce Japan, which has to rely on imports to meet domestic needs.

The depreciation of the yen, which plunged to its lowest level in over three decades against the U.S. dollar, exacerbated the pain, cutting into national wealth. The dollar averaged 130.77 yen in 2022, 19.5 percent higher than the year before.

A weak yen cuts both ways, inflating the value of imports but also boosting the overseas earnings of Japanese exporters. Alarmed by the yen's rapid fall against the dollar, a reflection of the divergent monetary policies of the Bank of Japan and the U.S. Federal Reserve, Japanese authorities intervened in the currency market to stem the depreciation.

Ideas:

Probably no other economy faces the positives and negatives of an economy like the Japanese economy due being resource-scarce as Japan has to import much of what the domestic economy needs.

When the yen is not so good or weak its a positive for Japanese exporters but a negative for importers who have to pay even more because of the weak yen.

Whether good of bad or positive or negative the US federal reserve and the Bank of Japan has different strategies or perspectives on how to handle or manage inflation in an economy.

Both the Japanese economy and the US economy has not been able to reduce inflation so its not easy to say which strategy is the best option for an economy.

Article:

Higher energy and raw material prices in 2022 were partly blamed on Russia's war in Ukraine, which raised supply concerns.

Japan saw its trade surplus with the United States expand for the second straight year to 6.54 trillion yen, helped by strong exports of cars and machinery. U.S. bound shipments increased 23.1 percent to 18.26 trillion yen, while imports surged 31.5 percent to 11.72 trillion yen, led by medicines.

Trade with China was apparently hit by its strict "zero-COVID" policy, leading Japan's trade deficit to more than double to 5.83 trillion yen.

Ideas:

Supply concerns and the Ukraine situation is definitely not a good situation and unfortunately maybe companies in Japan or the Japanese economy don't have any other sources for what it needs related to raw materials and so on.

So while inflation might still be strong in the US there is still strong demand for Japanese cars and machinery which has a 23.1 percent increase but at the same time imports increased to 31.5 percent which while good for the US not so good for the Japanese current account overall.

The strict China covid policy hopefully will end soon or has ended and maybe trade between China and Japan can get back to some kind of normalcy or new normal. 

Article:

Imports grew 21.8 percent to 24.83 trillion yen, helped by clothing, smartphones and electronic components. Exports only increased 5.7 percent to 19.01 trillion yen.

Japan's trade surplus with the rest of Asia, including China, fell to 2.08 trillion yen, roughly a third of its 2021 level. The nation had a trade deficit of 2.02 trillion yen with the European Union, remaining in the red for the 11th year.

In December alone, the country's trade deficit stood at 1.45 trillion yen, with imports increasing 20.6 percent to 10.24 trillion yen and exports up 11.5 percent at 8.79 trillion yen.

Ideas:

As we see trade with China and the rest of Asia is not what was hoped for. And even with the EU trade was not so good which might indicate a slowdown overall in global trade except for trade with the US.

But the real challenge seems to be the weak yen which makes the value of imports more than the value of exports even though exports were up 11.5 percent. 

But again even a weak yen makes the value of exports seem more that what the real value is or was.

Global trade is never all positive or all negative as trade with the US for Japan seems to be strong and steady but for the rest of the global market is somewhat not as good as it was in 2021.

Have a nice day and be safe!

Bank of Japan:

Article Source: https://mainichi.jp/english/articles/20230118/p2g/00m/0bu/018000c

Article:

TOKYO (Kyodo) -- The Bank of Japan on Wednesday made no change to its ultralow rate policy, defying market pressure to do so after last month allowing key long-term government bond yields to move in a wider range.

Despite forecasting inflation to reach 3 percent, above its 2 percent target, at the end of a two-day policy meeting, the BOJ stuck to its yield curve control program designed to keep both short-term and long-term interest rates at rock-bottom levels.

The yen plunged relative to the U.S. dollar immediately after the BOJ's decision.

Ideas:

It's not a surprise that the Bank of Japan had no change in its ultra-low rate policy even though there might have been market pressure to increase the key rate.

Probably the BOJ allowing the long-term government bond yields to move in a wider range might have been somewhat of a compromise to try and keep markets content.

But as seen the yen plunged relative to the US dollar so not all in the market were satisfied with what the BOJ did.

Perhaps the BOJ has a hidden motive even though inflation is expected to reach 3 percent in the future. 

For example, keeping the rate low means exports can gain more revenue which can offset the losses related to the increase in prices of imports.

Article:

The 0.5 percent cap on 10-year Japanese government bond yields was retained in a push-back against market players who sold government bonds to test the tolerance of the nation's dovish central bank and challenge the recently altered limit.

The yen had recovered against the U.S. dollar after it tumbled last year when financial markets priced in the policy gap between the BOJ, deeply committed to monetary easing, and the U.S. Federal Reserve which began a rate hike cycle to fight surging inflation.

Many BOJ watchers had expected no change this time, even amid growing speculation the central bank would further expand the 10-year yield trade band of minus 0.5 percent and 0.5 percent, or scrap the yield curve control program, launched in 2016, altogether.

Ideas:

It seems the BOJ is set in its ways and be even stubborn to the point of not allowing market outcome to determine what it should do. 

Market players might try to push the BOJ and what is does but in the end the BOJ has the final say related to what happens and not market players.

While the US might feel it has the best strategy for the US economy, and the BOJ feels it has the best strategy for the Japanese economy too.

But to be fair to both the US Federal Reserve and the Bank of Japan the strategy of both groups really hasn't reduced inflation in both countries.

Article:

The BOJ said it expects short-term and long-term interest rates to stay "at their present or lower levels," maintaining its policy guidance.

Under its yield curve control program, short-term interest rates are set at minus 0.1 percent while 10-year yields are guided around zero percent.

In a fresh outlook report, the BOJ forecast core consumer prices excluding volatile fresh food items to rise 3 percent in the year to March 2023, up from its earlier projection of 2.9 percent. The key gauge of inflation will likely gain 1.6 percent in fiscal 2023 and then 1.8 percent, undershooting the 2 percent inflation target.

Ideas:

It's not a surprise that the BOJ is maintaining is current policy as most likely they feel it's the best strategy for the Japanese economy.

The 2 percent inflation target is really not about wholesale prices but more about consumer demand and consumer spending which has not been very robust and it's usually not as robust as in the US or the EU.

Inflation is really not a bad situation if it includes an increase in consumer spending and or consumer demand for the Japanese economy.

Unfortunately, because of price increases and no real increases in wages consumer demand and consumer spending is not as robust as it should be just yet.

Have a nice day and be safe!

Japan Wholesale Inflation:

 Article Source: https://mainichi.jp/english/articles/20230116/p2g/00m/0bu/008000c

Article:

TOKYO (Kyodo) -- Wholesale prices in Japan jumped a record 9.7 percent in 2022 from a year ago after December became another month of double-digit growth, as higher import costs kept up inflationary pressures and squeezed corporate profits, the Bank of Japan said Monday.

The annual gain in wholesale prices was the biggest since comparable data became available in 1981 and twice as fast as in 2021 when a 4.6 percent increase was reported. In December alone, the price of goods traded between companies surged 10.2 percent, topping 10 percent for the second time in 2022 and marking the second-largest gain on record.

Japan saw the corporate goods price index rise year over year for the 22nd straight month, prompting companies to pass on higher costs to consumers to remain profitable.

Ideas:

Usually Japan companies are reluctant to pass on their costs to those next in the supply Japan even other companies besides the final customer.

Maybe after two years of increased energy and raw materials costs reducing many profit margins companies now feel they have no choice but to pass on their costs.

As they pass on their costs to the next company in the supply chain that company might pass on their increased costs to the next in the supply chain until it reaches the final customer.

By now consumers either have gotten used to the constant increase in prices and or are looking for substitutes if they are able to find any.

Article:

The country's consumer prices, which are affected by wholesale prices, have also been climbing, albeit at a much slower pace, and have remained above the BOJ's 2 percent target.

The yen's sharp depreciation against the U.S. dollar has added to the woes of resource-scarce Japan by inflating the cost of energy imports as well as those of raw materials and food items. Import prices gained 39.1 percent over the year in 2022, while export prices rose 16.2 percent in yen terms.

The BOJ has said that such cost-push inflation is transitory and ultralow rates should be maintained to achieve its 2 percent inflation target stably and sustainably.

Ideas:

Import prices increased by 39.1 percent while export prices increased by 16.2 percent which means most likely the Japanese current account lost revenue.

But we really don't know the value of imports and exports overall to determine if the current account decreased.

The BOJ can say that inflation is transitory or limited or short-term but most likely the average consumer might not feel that as they have live through it everyday.

The BOJ 2 percent inflation target is more about consumer demand and consumer spending and not really about wholesale price increases.

Article:

But rising prices of everyday goods have been hurting consumer sentiment and financial markets have piled pressure on the BOJ to tweak its policy at a time when major central banks have been fighting soaring inflation by raising interest rates.

The BOJ surprised markets in December by widening the trading band for benchmark 10-year government bond yields, even as its governor denied it was effectively a rate hike or part of monetary tightening.

The 10.2 percent gain in December wholesale prices was the steepest since 10.3 percent in September when Japanese authorities intervened in the foreign exchange market to stem the yen's rapid depreciation.

Ideas:

Most likely consumer sentiment has never been a strong component of the Japanese economy as Japanese consumers don't spend like they do in the US or the EU.

The BOJ keeps saying that its not going increase the key rate as they feel the Japanese economy is just too weak.

At the same time the BOJ has got to be under pressure to do something related to the weak yen and the constant increase in prices on the domestic level.

But the BOJ might still be on the right tract as even though the US and the EU have increased interest rates, inflation and economic growth in those countries and areas have not improved much.

Article:

Import prices climbed 22.8 percent in December, compared with a 12.1 percent increase for export prices.

Japanese companies have been reluctant to raise retail prices and instead have chosen to absorb rising costs for fear of scaring away consumers. The passing on of higher costs has become more evident, though, with price hikes across a wider range of items.

Among major items that reported sharp price increases, iron and steel products jumped 20.9 percent and pulp and paper rose 13.3 percent.

Ideas:

As import prices increased 22.8 percent in December and export prices increased 12.1 percent which means again the Japanese current account decreased.

But again we don't really know the real value of exports and imports to say how much the current account decreased in December.

Even though companies have been reluctant to pass on their higher costs, eventually as their profit margins continue to shrink they might not have a choice and pass on some or all of their costs to the customer.

By now, after two years most likely consumers in Japan have gotten used to the idea that many companies are passing on their costs to the customer.

Article:

Petroleum and coal products increased 8.0 percent and food prices were up 7.7 percent.

The government is scheduled to release consumer prices data for December on Friday, after the BOJ holds a two-day policy meeting starting Tuesday.

Ideas:

A 7.7 percent increase in food prices might have a significant effect on some consumers especially those who are in limited incomes or fixed incomes and even families as they have to find substitutes for food items that have risen too much for their budgets or incomes.

Most likely nothing really important is going to come out of the next BOJ meeting as they keep indicating they have no intention of changing their current ultra-low policy of keeping the rate low.

Even though the US and the EU have continued to increased its key rate the BOJ is doing the opposite and maybe it's good idea as the US and EU economies are very different than the Japanese economy.

Have a nice day and be safe!