Japan Inflation: Updated October 27, 2024.

Japan inflation slows to 2.4% in Sept. as energy bill subsidy resumes

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Ideas:

Inflation in Japan has been steady and its just not one month but it seems like every month, so all those months can add up for Japanese consumers and businesses.

Inflation is in itself is not a bad thing, but when it becomes excessive it can be a stress for many consumers and businesses. 

There is good inflation, the increase of prices due to increased demand and there is not so good inflation, price increases by companies that are just passing on their increased costs to the next in the supply chain, including the final customer.

Japan is resource-poor country which means Japan has to import much of what is needs, which of course means its subject to global prices increases on most products including gas and oil.

And then add in the weak yen, and imports are inflated even more for not just Japanese consumers but Japanese businesses too.

Energy and fresh food are taken out of most consumer price indexes, globally, as the two items can be very volatile, meaning prices can go up and down a lot.

Subsidies are good and needed but are they enough to cover the Japanese household energy costs in the summer and then as winter approaches, most likely global warming or global changes are going to cause record low temperatures this winter.

As there were probably a lot of new air-conditioners sold this past summer in Japan and the same situation might happen in the winter with an increase in sales in heaters this winter.

Japan, if they don't, have need trade agreements with energy producing countries to try and control the price of energy, and Japan has to import much of what it needs.

There has been a lot of discussion if there really was/is a rice shortage in Japan, as even the Japanese government has suggested there never was a rice shortage. But at the same time, there might have been a reduction in the harvest of rice and the weather might have limited the rice production, which of course, related to supply and demand, anytime there is a shortage, prices will increase.

Anytime there as reduced harvest, of any kind of fruit and vegetables, farmers and so on will increase prices as they need to make up for the limited supply with higher prices.

And of course due to production costs, now even rice farmers are passing on their costs to the next in the supply chain, which of course will affect the Japanese consumer.

The summers in Japan have gotten hot each year, which means the price of fruit and vegetables will most likely be higher.

The price of durable good might have nothing to with anything other than the increase of prices related to manufacturing of the durable products, as manufacturers, again, are passing on their increase costs to the next in the supply chain.

Hotel expenses might be related to either an increase in demand and or an increase in energy bills due to the summer heat.

The Bank of Japan is watching very carefully the increase or decrease in prices and whether they should increase the key interest rate this fall.

If prices continue to increase the BOJ might decide to increase the key rate, if prices remain steady and not increase that much the BOJ might delay the interest rate increase.

But another key ingredient is what is going to happen in the stock markets this fall, and of course what is going to happen in the US elections. If the global stock markers go crazy the BOJ might wait until things cool down.

Prices alone most likely is not going to get the Bank of Japan to increase the key rate as what is happening in the global markets, again, might have an affect on what the BOJ does.

For example, the stock market upheaval, this past summer, might have forced the Bank of Japan to  step back from a rate increase this fall.

Again, as the US election is coming up, and the chance the global markets are going to be somewhat crazy the BOJ might wait until December or even January to make its move.

Have a nice day!