Japan Price Increases: Updated Nov. 4, 2023

 Article Source:  https://mainichi.jp/english/articles/20230722/p2g/00m/0bu/026000c

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TOKYO (Kyodo) -- Japanese consumers will have seen price hikes on 30,009 food and beverage products by October as retailers pass on higher costs to protect their profits, according to a credit research company.

The total, including the hikes in coming months, already eclipses the 2022 total of 25,768 items, Teikoku Databank Ltd. said in its report in mid-July.

Ideas:

In the past, before the pandemic, Japanese companies rarely passed on their higher costs as they just absorbed the costs and accepted lower profit margins.

But also in the past there probably wasn't much in terms of higher costs related to energy increases and or raw materials costs. 

But this is a different world we live in now and inflation is a global situation that is not going away any time soon.

Of course it possible that many of the price increase might not be felt or noticed by most consumers, but of course the lower income groups always feel them.

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The company also maintained its forecast for the full year at around 35,000 items, saying October is expected to see the most price hikes.

The added burden on households has reduced purchasing power, making it increasingly unlikely companies will continue increasing prices at such a rapid pace as it will further dampen demand, it said.

Ideas:

Companies have to find a balance between passing on their costs and not reducing demand for their products because price increases.

Of course their are products that are necessities, meaning they are needed no matter what the price, but then there are products that are not needed so much and might be considered extras if we want and have the extra income for the products.

Of course inelastic demand products and elastic demand products, for the most part, are very much different.

Inelastic demand products, and companies, for the most part, can get away with price increases as customers will or have to continue to buy them despite the price increases.

But elastic demand products are much different as companies have to be careful about price increases as a elastic demand product if a price increase becomes too much a company might lose customers.

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The company cited rises in electricity and labor costs, along with a weaker yen pushing up import prices, as factors that will lead to further price increases.

October will see price hikes for 3,716 items, including sausages and alcoholic beverages, up about 300 from the number announced at the end of June.

Ideas:

Electricity cost will probably continue to increase but not a a faster rate in the future. Labor cost increases might be good thing as an increase in wages might help consumer demand as they feel better about their wage increases and begin to spend more in the economy..

Import costs will continue to increase as the variance between the Japanese yen and the US dollar increased, which will increase import prices. 

Again, of course even though many product prices might be increased maybe some consumers might not even notice the price increases that much as inflation and price increases are very much as individual situation as it depends a lot on consumer needs and consumer tastes.

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But the company said the monthly total could end at over 8,000 as more companies are likely to announce price changes.

It also expects intermittent price hikes between the yearend and the beginning of 2024.

The survey compiled pricing data from 105 listed and 90 non-listed companies in the food and beverage industry.

Ideas:

Again, of the 8,000 products that might have price increased how many products to customers actually buy in a day, a week, a month, and so on.

Most likely, as inflation as continued in Japan, many households or even many single households have not prioritized their daily and month buying needs and only buy what they need and maybe don't buy too much of what they don't need.

And then there the international tourists who come to Japan, and because the Japanese yen is weak, they have more purchasing power, and they can buy more than usual, and they probably don't see or feel the price increases too much compared to what the domestic consumer feels.

Have a nice day and be safe!