Japan Inflation:

 Article Source:

https://mainichi.jp/english/articles/20230331/p2g/00m/0bu/051000c

Article:

TOKYO (Kyodo) -- Japan will see another wave of price hikes at the start of the new business year from Saturday as higher raw material costs eat into company margins, dealing yet another blow to consumers already facing inflation rates that have outpaced wage growth.

Over 5,100 food and beverages, ranging from mayonnaise and dairy products to imported wine will be pricier. Research firm Teikoku Databank estimates an average household will have to pay an extra 2,140 yen ($16) a month for foodstuffs.

Ideas:

At one time, Japanese companies were reluctant to pass-on their costs to the next in the supply chain including the final consumer. But those days might be long gone as material costs keep increasing and company profit margins keep decreasing.

Maybe for some households an extra 2,140 yen might be too much of a strain on some but for some they might not even notice the difference.

It all depends on what products or foodstuffs are being targeted for prices increase as consumes have like and dislikes. If a product they really like sees a price increase they might not care too much and still buy it.

But if its a product they don't care about they might look for a substitute product at a lower price if they can find it.

Article:

In a sign that price hikes are broadening, consumers will also be saddled with more expensive services like public transportation and package delivery, while theme parks are raising ticket prices in response to the double whammy of COVID-19 aftershocks and surging costs.

Consumers are already bearing the brunt of inflation that has hit a four-decade high above 4 percent, even though the outcome of annual wage negotiations between labor unions and management for the new fiscal year will likely deliver the largest salary increases in three decades.

Ideas:

Once price hikes in an economy begin to increase they don't seem to stop as other companies begin to do the same as other companies. It becomes a synergistic effect over time.

Some companies to remain competitive will actually increase prices just to match the price increases of other companies as they might rationalize we should increase our prices too to keep our profits strong.

Some companies or many companies have real reasons to increase prices but again some might do just because other companies increase their prices.

Article:

The government, for its part, is scrambling to protect consumers by reducing utility bills and handing out cash to low-income households as it looks to head off voter discontent ahead of key local elections in April.

The spread of the avian flu is exacerbating the pain, sending the prices of eggs and products made with them like mayonnaise higher. Condiment makers Kewpie Corp. and Ajinomoto Co. are going ahead with their fourth price hike since July 2021.

Ideas:

It's good that the Japanese government is trying to reduce utility bills and handing out cash to low-income households, but the question for how long and how much. Is it just a one-time deal or is it monthly until inflation is significantly lower.

But of course the government or diet is not thinking only of households as they are thinking of local elections and what voters might think.

New challenges always some up such as the avian flu situation which can complicate the supply and demand of certain products.

Article:

Kewpie's 450-gram mayonnaise will be sold at 520 yen, nearly a 10 percent increase on the most recent hike.

Other food items like cheese, yogurt, ham and sausages will see their prices rise by around 30 percent. The price of soy sauce, a daily necessity for many Japanese households, will be some 10 percent higher.

Ideas:

Again, some consumers or households might not even notice the price increases but for some consumers and households even a price increase from 450 yen to 520 yen might be too much as they might try to find a cheaper substitute and or not buy it.

It all depends on a consumers preferences and or what they like or don't like and what they can afford. For some, again, if they like a product they keep buying it or try to keep buying it despite the continual price increases.

But for some consumers/households there might be breaking point where they say enough is enough and look for cheaper substitutes and or just stop buying the product.

Article:

Six major train operators in the Kansai region centering on Osaka, western Japan, are increasing fares in line with those in the Tokyo metropolitan area.

They include Osaka Metro Co., which operates subways in Osaka and nearby areas, along with Hankyu Corp. which links Osaka with Kobe and Kyoto. Passengers will have to pay more for reserved seats on some shinkansen bullet trains running between Osaka and Fukuoka.

Ideas:

This of course might be a situation where Tokyo increased their prices so Osaka feels like they  need to do the same thing.

Most likely they have already estimated how much revenue they might lose when the price increases but most likely feel they have no choice and or they aren't going to lose that much.

Also it looks like only those who buy the reserved seats are going to have to pay more which might be the higher income group, which means they might not even notice the price increase that much.

Article:

After the COVID-19 pandemic boosted demand for courier and delivery services and deepened labor shortages, Yamato Transport Co. and Sagawa Express Co. are raising fees by around 10 percent.

The price hikes coincide with Japan's slow recovery from the COVID-19 pandemic as higher fuel and raw material costs, partly blamed on Russia's war on Ukraine, are further inflated by the yen's precipitous fall. Higher energy costs are particularly painful for the resource-poor nation.

Ideas:

It has been noted before, that the courier and delivery services companies came under so much pressure that they increased their delivery times as it became too much for their workers and or they didn't have enough workers for the demand.

If the delivery companies such as Yamato and UPS and so on use trucks that means fuel usage might be high each day so it's no doubt they have to increase prices to maintain their profit margins.

Time will tell if Yamato and other companies maintain the number of workers they have if demand for their services decreases.

Article:

With the lifting of antivirus curbs, Japan has seen a pick-up in demand for services as more people eat out, go on trips and spend more on entertainment. Private consumption, which makes up the bulk of gross domestic product, has remained resilient despite the blow from inflation.

A Teikoku Databank survey targeting around 190 theme parks, zoos and aquariums in Japan found that roughly 40 percent are hiking their ticket prices as of April.

Ideas:

Private consumption or consumer spending might seem resilient or somewhat strong but how long can it last if inflation remains strong. 

Right now as the pandemic as finally ended more people are out and about but for how long before consumer spending begins to lag as it usually does. 

No doubt as demand is high at this time at theme parks they also are increasing prices and of course they have increased energy and material costs they they need to cover.

Article:

The government, for its part, is implementing steps to mitigate the inflation pain while Prime Minister Fumio Kishida, who has a stated goal of achieving growth and wealth redistribution, is urging companies to reward employees with aggressive wage hikes that can keep pace with inflation, which hit 4.2 percent in January from a year earlier.

The government's new inflation-relief package includes cash handouts for low-income families. while expecting mothers can receive a lump-sum payment of 500,000 yen, up from 420,000 yen at present. Kishida has emphasized making Japan a friendlier child-rearing environment at a time when the country's birthrate has sunk to a historic low.

Ideas:

Just what is Prime Minister Kishida's wealth redistribution plan; is it aggressive wage increases, is it tax cuts, but just what it the plan really.

Wage increases are good and needed but are they going to be enough to see some significant economic growth in the future.

Are consumers/workers going to spend the extra income they get in the economy. Are they going to just save it or are they going to do both.

Japan will never be a friendly child-rearing country until they change their labor situation where they make it a more like the Nordic countries. Who wants to have children, like in South Korea too where families have to pay too much for education and companies, for the most part, are not family friendly and or women worker friendly.

Article:

Pensioners aged 68 and older, meanwhile, will see their national pension benefits increase 1.9 percent in fiscal 2023 from a year earlier, far below the pace of inflation.

Wage growth will be a key determinant of economic expansion after the world's third-largest economy narrowly escaped a recession last year.

Ideas:

Pensioners always get the short end of the stick related to inflation, job discrimination, and so on. If someone can work and can do the job why shouldn't they be allowed to work and contribute to society in a meaningful way.

In the US there is no age limit, you just keep working if you can and are able to work and you want to.

Wage growth might be important but will it be enough for increase overall economic growth.

And what about those working for small and medium sized companies that might not see any wage increases compared to the large companies. What is the government, if anything going to do help them and their wage challenges.

Article:

Japanese companies have agreed to an average pay hike of 3.76 percent during this year's "shunto" wage negotiations, according to preliminary data from the Japanese Trade Union Confederation, the umbrella group of labor unions. However, a chasm remains between large companies and smaller ones in the pace of pay hikes.

Economists expect food price hikes will continue in the coming months, even as government subsidies to curb utility bills take some pressure off the consumer price index.

Ideas:

If the small and medium sized companies can't afford increase wages, which is real and legitimate possibility, that means a large part of the Japanese working population is not going to get much of a wage increase which, which means their wages might still be lower than inflation, which means they will continue to spend less in the economy.

Food prices will continue to increase which could means some consumers will continue to feel the increased prices while some consumers might not even notice the price increases.

Utility bills might be curbed or decreased somewhat but what about all the other expenses that households have to deal with each month. 

Article:

Saisuke Sakai, senior economist at Mizuho Research & Technologies, said higher food prices will boost spending by an average 32,000 yen per household in the fiscal year from April.

"Inflation will continue to be a drag on households for a while," he said.

Ideas:

If the average household expects to spend an extra 320,000 yen from April what will that mean for extra spending in the economy. Yes, it will boost food spending but what about other spending in the economy and what about lower-income household, can they afford the 320,000 yen increase in food purchases.

Something will have to give as it always does in terms of overall spending in the economy, as households only have so much income to spend each month. That 320,000 for food might have been used somewhere else in the economy instead of increase prices on food.

Have a nice day and be safe!

 

Japan Jobless Rate:

 Article Source:

https://mainichi.jp/english/articles/20230331/p2g/00m/0bu/028000c

Article:

TOKYO (Kyodo) -- Japan's unemployment rate in February rose 0.2 point from the previous month to 2.6 percent, worsening for the first time in five months, as more people sought better working conditions amid an economic recovery from the coronavirus pandemic, the government said Friday.

The job availability ratio for the reporting month fell 0.01 point from January to 1.34, worsening for the second straight month, separate government data showed. The ratio means there were 134 job openings for every 100 job seekers.

Ideas:

Whenever people quit their jobs or lose their jobs it might take time to find a new job which of course means the jobless rate will go up. 

And as people lose their jobs or quit their jobs and are looking for a job and maybe get unemployment benefits during that time, they are listed as unemployed compared to those who just give up and don't even register for unemployment benefits or they can't get benefits.

A 0.01 point decrease in jobs availability is not big decrease as there are still 134 jobs available for every job seeker.

But the question should be what kind of jobs are possible for job seekers; are they contract jobs, are they part-time jobs are are they full benefits jobs.

Article:

"The employment situation is gradually improving, although some industries have been struggling," said labor minister Katsunobu Kato, adding that the effects of rising prices need to be monitored.

The total number of unemployed stood at a seasonally adjusted 1.80 million people in February, up 7.8 percent from the previous month.

Ideas:

As the economy improves people start to look for other jobs if they don't like their present jobs, which of course means the unemployment rate might increase at the same time.

Some industries might still be experiencing material shortages and or logistics challenges which might be slowing down economic improvements. 

Of course maybe even some services type jobs are not being filled as when the pandemic hit and services type companies reduced their workers and now they can't re-fill those jobs again.

Increased prices of course can hamper or limit sales in some industries as they didn't have a choice and had to increase prices.

Article:

Among them, 760,000 people voluntarily left their jobs, up 11.8 percent, while 450,000 were dismissed, also up 7.1 percent.

"Some people may have begun looking for new jobs ahead of the new fiscal year or quit their jobs for higher wages," an official at the internal affairs ministry said.

Ideas:

Whenever there are 760,00 people who left their jobs they can only mean or might mean they want or need a better job with better benefits or wages.

Maybe the 450,00 who were dismissed might be in sectors or companies that went out of business as even in Japan there is a high rate of failure in some sectors or companies.

In any economy there is never 0 percent unemployment as people as some people are always looking for jobs, between jobs and so on.

Article:

As for job openings, the hotel and restaurant industry marked the sharpest increase of 37.2 percent from a year earlier, followed by a 23.7 percent jump in offers in the education sector.

There was only a growth of 0.2 percent and 0.3 percent in the manufacturing and construction industries, respectively.

Ideas:

The hotel and restaurant sector and the hotel services sector were the sectors that lost the most jobs during the pandemic so its logical that they would be the sectors that are adding more jobs.

But at the same time, are these industries able to find enough workers to fill all the jobs they lost during the pandemic.

Most likely the manufacturing and construction industries didn't lose a lot of jobs during the pandemic as such they haven't needed to add a lot of jobs .

What might have happened during the pandemic and since was the logistics and material shortages which might have some sectors might have lost some jobs and most likely they have been replaced by now.

Have a nice day and be safe!

Japan Industrial Output:

 Article Source:

https://mainichi.jp/english/articles/20230331/p2g/00m/0bu/032000c

Article:

TOKYO (Kyodo) -- Japan's industrial output in February rose 4.5 percent from the previous month for the first increase in two months after vehicle production increased on the back of easing semiconductor shortages, government data showed Friday.

The seasonally adjusted index of production at factories and mines stood at 94.8 against the 2015 base of 100, the Ministry of Economy, Trade and Industry said in a preliminary report. The increase followed a downwardly revised 5.3 percent contraction in January.

Ideas:

Industrial production is usually never a perfect linear curve as there are always periods of up and downs in the sector.

Such as the shortage of semiconductors in the industry and other challenges which might make it difficult to keep production going as planned.

The trick of course is to anticipate periods of shutdowns or shortages and plan accordingly the best a company can.

An index of 94.8 is not necessarily a bad number but of course not a great number too as it could have been worse related to the shortages.

Article:

The ministry retained its basic assessment from the previous month that industrial production is "weakening."

Of the 15 industrial sectors the survey covers, nine logged increased output while six saw decreases.

Leading the rise was motor vehicle output with a 15.4 percent expansion from the previous month, boosted by increased manufacturing of passenger vehicles and car parts, including engines.

Ideas:

Just what does a "weakening" description really mean. Nine sectors was increase while six saw decreases. That doesn't really sound like a weakening industry unless you include what happened in the previous months. 

Manufacturing of cars has always been a major driver of exports and the Japanese economy. And as shortages continue to not be a challenge there is no reason that the production of cars will continue to drive the Japanese economy.

The only challenge might be the continued problems related to China and exports or production in China in the future.

Article:

The production machinery sector also saw growth of 9.2 percent on the back of increased overseas demand, led by semiconductor-manufacturing equipment.

Among the six sectors reporting reduced output were chemicals excluding inorganic and organic chemicals and medicine, which dropped 11.8 percent due mainly to falling orders for cosmetics and lotions.

Ideas:

Perhaps the falling orders for cosmetics and lotions might be related to increased competition from countries who have have strong cosmetics and lotions sectors such as South Korea.

The global cosmetic industry is very competitive and is sometimes controlled by a few big companies and everyone else including Japanese companies might be struggling to keep their head above water each quarter.

But then again, in Japan, Japanese cosmetics are very strong so the real reason for the falling order might just be for export order and not orders in Japan.

Article:

The index of industrial shipments climbed 3.6 percent to 92.4, while that of inventories rose 1.4 percent to 103.6, the first time each category has risen in six months and three months, respectively.

Based on a poll of manufacturers, the ministry expects output to increase 2.3 percent in March and to go up 4.4 percent in April.

"Close attention needs to be paid to the effects of rising prices and parts and material shortages" on output, a ministry official said.

Ideas:

The category if inventories might means different things such as anytime there is a significant increase in inventories might be a slowdown in demand for some products and or it could mean a mismatch in production and sales estimates.

If the poll is correct it might mean manufacturers are optimistic about the future and see sales and production increasing.

Of course there is always the need to pay close attention to rising prices and materials shortages as it seems Japan is not of shortage challenge yet or even the increase in materials costs just yet.

Have a nice day and be safe!

Japan Consumer Prices:

 Article Source:

 https://mainichi.jp/english/articles/20230324/p2g/00m/0bu/018000c

Article:

TOKYO (Kyodo) -- Japan's core consumer prices rose 3.1 percent in February from a year earlier, slowing from a four-decade high as government subsidies on utility bills curbed inflationary pressure while surging food prices threaten to dampen household sentiment, government data showed Friday.

The resource-scarce nation saw the pace of gain in the key gauge of inflation slow for the first time in 13 months, providing relief to Prime Minister Fumio Kishida ahead of nationwide local elections this spring.

Ideas:

Even a 3.1 percent increase might have been too much for some households as inflation is has increased for the past 13 months which means consumers and households have seen constant increased which means any extra income they might have or had been reduced over the past 13 months.

It also means of course less spending in the economy, which of course means less sales and profits for companies as consumers reduce their spending. 

There might have been government subsidies related to household energy costs but is it was it enough to really help households.

Of course a government can only do so much and sometimes even some help can interfere in a market economy. 

Article:

Inflation has remained well above the Bank of Japan's 2 percent target for nearly a year, ensuring the Japanese central bank will likely continue to feel pressure to roll back monetary stimulus under its new governor who assumes the post in April.

The core consumer price index excluding volatile fresh food items would have risen around 4.2 percent in February without the government subsidies on electricity and gas bills, according to the Ministry of Internal Affairs and Communications.

Ideas:

The Bank of Japan's inflationary 2 percent target was never really about wholesale inflation of energy inflation or the weak yen caused inflation but about consumer demand and consumer spending inflation which really hasn't had a major impact in the Japanese economy since 2019.

So far the Bank of Japan has resisted any attempts to follow the US or the EU in increasing rates as they keep saying the Japanese economy is too fragile or weak for key interest rate increases.

Inflation in Japan is not as high as inflation in the US or the EU but because Japanese consumes are very sensitive to any price increases the Bank of Japan has so far resisted any real changes in the economy.

Article:

In January, the index rose 4.2 percent, the fastest pace of gain since 1981, highlighting the nation's sensitivity to swings in energy and commodity prices and the yen's sharp depreciation that has inflated their import costs.

Japanese households are increasingly feeling the pain of rising prices of everyday goods, as companies continue to pass on higher raw material costs to consumers. More robust wage growth to keep pace with inflation is crucial in supporting domestic demand which has so far remained resilient.

Ideas:

If and when companies do increase wages the question who is going to pay for the wage increases. 

The mindset in Japan maybe has changed as companies for a very long time were very reluctant to pass-on their cost increases to the next in the supply chain and or the final consumers. 

But as companies over the last two years have seen their profit margins continue to decrease maybe now they think they have no choice but increase prices on their products and services.

Of course consumers might not be too happy and they will most likely continue to reduce spending and or cut-back on needed products and services. 

Article:

Food prices rose 7.8 percent, the fastest pace in nearly 47 years, as higher raw material and transportation costs made a range of products from hamburgers to chocolate pricier. Egg prices surged 19.9 percent amid bird flu-related supply concerns.

Subsidies to reduce electricity and gas bills began in January, as the lagging impact of surging crude oil and natural gas prices seen last year continued to feed through.

Ideas:

As food prices continue to increase which of course means households and consumers will either cutback on their food spending and or look for substitutes at a lower price with the same quality if they can find them.

Supply concerns and eggs has even hit McDonalds and the products they offer or want to offer, which caused them to limit or reduce their menus.

Subsidies are good and needed but how much is it really helping and does it help with a households extra income that they can use in the economy for extra spending.

Article:

The government unveiled this week a fresh 2 trillion yen ($15 billion) inflation relief package that includes cash handouts to low-income families.

Energy prices dipped 0.7 percent, the first fall in nearly two years. Electricity bills fell 5.5 percent while city gas gained 16.6 percent, though at half the pace of the previous month.

Ideas:

Cash handouts are good and needed but are they a one-time offer or are they monthly handouts until inflation is under control.

Energy prices might be decreasing but are they decreasing fast enough for households to feel good about their household energy costs.

And do they see significant increases in their extra income that they can use in the economy for extra spending which of course is good for companies especially service related companies.

Article:

"Food price hikes are expected in the coming months, in a blow to households. Inflationary pressure remains strong but wages are also rising so consumption will likely be supported," said Yuichi Kodama, chief economist at the Meiji Yasuda Research Institute.

"Difficult times lie ahead until around this summer. After that, we expect slower CPI growth, because the surge in crude oil prices and the yen's weakening have paused, and food prices will likely stabilize," he added.

Ideas:

There are always positive and negative situations in an economy. In this case inflation is increasing and maybe an increase in wages can offset the inflation increase.

Inflation should not always be considered a negative situations as inflation can sometimes be related to increase in consumer demand and consumer spending.

As companies see increases in spending for their products of course they are going to increase prices to take advantage of increased consumer demand and consumer spending.

But for too long, in Japan, consumer spending and consumer demand as been weak and as never really had a major impact on the Japanese economy, even though it is estimated that consumer spending is 50 percent of GDP.

Article:

When fresh food and energy prices are excluded, so-called "core-core" CPI gained 3.5 percent, the fastest rise in 41 years.

The BOJ has said the recent spike in inflation should be temporary, given that it is largely driven by higher import costs. It forecasts core CPI will undershoot its 2 percent target later this year.

Ideas:

Even though CPI gained 3.5 percent and the fastest in 41 years, inflation in Japan has been much lower than in the US and the EU. 
In 2022 inflation in the US was estimated to have been over 10 percent while 3.5 might appear to be high in Japan is nowhere near what it was in the US.

The BOJ keeps saying inflation is only temporary but tell that to the companies and households who have live with inflation the past two years.

If you take away the weak yen and increases in energy prices what might inflation actually look like.

Now if you look at consumer spending and consumer demand, do they reach the 2 percent level that the Bank of Japan wants to see in the Japanese economy. Probably not as consumer spending is not very good at the present time due to inflation and consumers/households reducing their spending levels.

Article:

The central bank aims to ensure stable inflation accompanied by robust wage growth.

Companies have agreed to raise pay by an average of 3.8 percent during this year's wage negotiations between labor unions and management, according to the Japanese Trade Union Confederation known as Rengo. The preliminary data boosts the likelihood the final results will show the sharpest gain in three decades.

Ideas:

The Bank of Japan or the central bank in Japan is very conservative and is not going to do anything that might cause instability in the economy. 

But what it hasn't been able to do is reduce inflation enough as inflation seems to be the main challenges of course with the weak yen,

Stable inflation might be considered inflation related to consumer spending and consumer demand along with wage growth and companies passing-on their wage costs to the next in the supply chain including final consumer which would be natural situation,

Have a nice day and be safe!