Japan Price Increases: Updated May 5, 2024,

 

Japan faces price hikes on 614 food items in June amid higher costs

Article Source:  https://mainichi.jp/english/articles/20240603/p2g/00m/0bu/001000c

Ideas:
There are many regions globally, that are being affected by extreme weather situations, and because Japan is a resource poor country, Japan is very vulnerable to the weather changes around the world.

And of course the weak Japanese yen, causes import prices to be even more higher than normal, which then cause importers to pass on their price increases to the next in the supply chain, including the final customer.

At one time, Japanese companies were somewhat reluctant to pass on their increased cost t the next in the supply chain, including the final customer. But these days, as inflation continues, and raw material prices continue to increase, and the Japanese yen remains weak, companies have no choice but to pass on their costs to remain in business.

The current prices increases might not seem that much, but you add in the constant prices hikes every month, or every six months for the last few years it does add up.

Other than Argentina, sometimes it seems like Japan is the only country that keeps getting hit with inflation, Of course its not true, but tell that to the average Japanese household.

As inflation continues in Japan, that means consumer or household spending is going to be even less which means the idea of consumer spending being about half of Japan's GDP is not going to reach is maximum potential any time soon.

Price increased might continue as the weak Japanese yen, causes import prices to increase and companies can no longer keep their profits margins safe so they need to pass on their costs to the next in the supply chain including the final customer.

The Bank of Japan, needs to be very careful about how much it intervenes in the currency market, as Japan doesn't want to be seen as a currency manipulator. 

At the same time, the Bank of Japan needs to find a way to reduce the current variance between the US key rate and the Japan key rate to help Japanese importers and import prices.

Also, the Bank of Japan needs to be aware, and I'm sure it is, that a weak Japanese yen, is good for foreign tourism as there are record numbers of foreign tourists coming to Japan and spending a lot.

Pension payments might have gone up and at the same time, according to a recent article, those on pensions were actually spending more than the younger age groups. 

But true, consumer sentiment is not where it should be in Japan recently, and if inflation continues it might remain low.

The 40,000 yen is good, but it might not be enough. Of course everything helps but how long for a Japanese family uses up the 40,000 yen supplement. 

Again, are Japanese households going to use the 40,000 yen or just put it in the bank and not use it. 

So, yes, Japanese households are spending an extra 106,000 yen over the year, and or having to pay an extra 106,000 yen each year and for some households that might be a lot which means they need to cutback on somethings maybe even needed things.

So, what that all means is consumer spending, which again, is maybe 50 percent or more of Japan's GDP is going to decrease even more and not reach it full potential to help the Japanese economy grow and not shrink.

The only good area is foreign tourism, with the weak Japanese yen, record numbers of foreign tourists keep entering Japan and keep spending as the weak yen gives them more purchasing power.

Have a nice day and be safe!