Japan Nov. Inflation. Updated Dec. 23, 2024.

 

Japan inflation accelerates in Nov. on reduced energy subsidies

Article Source:  https://mainichi.jp/english/articles/20241220/p2g/00m/0bu/005000c

Ideas:
If the Japanese government has reduced subsidies for utility bills and rice that means, most likely for most Japanese households they will have less disposable income which of course could mean less consumer spending in the Japanese economy.

Increased inflation at 2.3 percent or 2.4 percent, might not seem like much, but for the low-income groups could be a major challenges related to disposable income or other spending they might want to do.

The Bank of Japan might want to stick with its target of 2 percent inflation but it doesn't seem to be doing much to get inflation under 2 percent. But that might be a strategy to not interfere in the natural situation of the Japanese economy, preferring to let inflation decreased on its own.

The Bank of Japan is very cautious and moves very slowly and probably will not make a move that could upset the financial markets in Japan and globally.

Inflation increasing from 2.3 to 2.4 percent is not that big of a change, as especially if it was related to the decrease of energy subsidies earlier.

Once again, the Bank of Japan moves very slow and says it wants to analyze more wage data which indicates its not ready to make a move just yet.

And yes, the next rate increase could be January, but at the same time, if anything unusual happens before then the BOJ don't hesitate to delay the next rate increase.

Japanese households again have to deal with the energy price increases which means their disposable income will be even less, which means less spending in the Japanese economy.

Whether conditions always plays havoc with the prices of produce and the hot summer in Japan played a big part in the reduced supply of rice.

And yes, farmers too have passed on their higher production costs to the next in the supply chain including the final customer.

And lets not forget the increase in prices of coffee and chocolate as producers and wholesales too passed on their increase in material costs to the next in the supply chain including of course the final customer.

As food prices, either at restaurants or supermarkets increase, Japanese consumers will either cut back or they will try to find substitutes that meet their expectations.

The lower-income groups will be hit even harder as they use more of the income for food than the other groups.

The upper-income groups might not even notice the price increases and or they don't care, as it probably doesn't affect them that much.

Household durable goods are not an everyday product and is only bought maybe once a year if even that.

Someone could take this two ways about in the increase in service prices, such service providers had to increase prices to cover the wage increases they needed to give their workers in the regular wage negotiations last April.

And or service providers had to increase wages for new hires as there is a labor shortage in Japan and as there are more jobs available to choose from, they had to hire new workers at a higher wage than normal, and they then had to increase prices to cover the wage increases.

Have a nice day!