Japan Core Consumer Prices: Updated April, 19, 2025.

Japan's core consumer prices up 3.2% in March on high rice prices

Article source:  https://mainichi.jp/english/articles/20250418/p2g/00m/0bu/008000c

Ideas;
Core consumer prices in Japan has been increasing ever since the pandemic started and while it might be slowing gradually there is no end in sight for Japanese households or the Japanese economy.

The Bank of Japan's target of 2 percent is a reasonable goal, like other central banks, but not much as changed even though the BOJ has implement two rate increases to try and decrease inflation with no really affect.

Perhaps the BOJ needs to increase the rate even more, but at the same time, there might be too many side effects that could hurt the Japanese economy.

From 3.0 to 3.2 percent might not seem that much of an increase but it could be enough to cause stress on some Japanese households including those with young children, or single parent households or even those on fixed incomes in Japan.

And it might be remember, that this might be increase of one month, but what about all of the other months where there were price increases and it starts to add up each month over time.

It can't be said that inflation in the US has decreased that much as many US households too are still feeling the affects of inflation.

An increase of 2.7 and 2.8 percent doesn't seem like that much but tell that to the Japanese single parent, or the part-time worker, or the fixed income couple in Japan.

At the same time, as inflation continues to increase in Japan, income inequality keeps increasing in Japan, which is the difference between the highest income and the lowest income and its been increasing every year since the asset bust of 1989. 

What is happening as income inequality continues to increase in Japan, it decreases Japanese consumer's disposable income which means less and less Japanese households are able to spend freely in the Japanese economy which is reducing economic growth in Japan.

Some might say the Bank of Japan needs to do more or some might say the Japanese government needs to do more to reduce inflation but governments can only do so much as maybe the normal tools used to manage the economy are not working there might not be much that can be done and the idea then is too just let inflation run its course naturally and hopefully it decreases over time.

That might be one strategy with the idea of do no harm, meaning don't make the situation worse, as maybe other more stern measures might cause more harm than good in the Japanese economy.

The Bank of Japan and the Japanese government are in a tricky situation now with more like a  catch-22 situation meaning whatever we do are going to have significant side affects and there is no real significant way to reduce inflation without harming the economy or Japanese households.

Its unfortunate that there is a so-called rice shortage in Japan or was rice shortage, as the Japanese government has attempted to release its reserve rice stockpiles to increase supply but with no real significant difference in prices and maybe the middlemen are keeping the prices artificially high at this time to maximize prices as much as possible.

Real wages is a different but still related story as inflation keeps real wages from increasing which means Japanese households have less and less purchasing power and or less and less disposable income to use in the Japanese economy.

And all of this means is Japanese consumer spending might be 50 percent of Japan's GDP, but as Japanese consumers real wages keep decreasing there is going to be less and less spending in the Japanese economy, and again, less economic growth.

It's quite possible some in the Japanese rice market might have more than normal market power, meaning they are influencing prices in a way that is upsetting the normal supply and demand mechanisms.

While in a market economy, everyone has the right to buy and sell as they see fit, but at the same time, there is the idea that no actor in market can just set a price that might be against the best intentions of society and that might be happening now. There is also the idea of whatever the market can bear, meaning the highest price we charge and not lose customers. But in this case consumers continue to buy rice, at a very high price,  as its a very important stable for Japanese households.

It seems Japanese suppliers maybe are using the hot weather or higher production costs as a way to keep prices high as why have rice prices this year increased significantly when production costs might have been increasing for many years.

In this case, it might be a good time for the Japanese government to introduce temporary price controls on rice, meaning put a maximum price on rice and then give subsidies to the Japanese farmers or middlemen to ease the stress on Japanese households.

Again, while not trying to influence supply and demand normal mechanisms too much price controls on Japanese food stables might be needed for the short-term until prices can bet back to some kind of normal. to reduce the stress on Japanese households especially those with children, those who are single parent households and fixed income households.

There is no real guarantee that rate increases can reduce inflation and there is no really guarantee how long it will take and there is also the problem with the side affects of rate increases which could significantly affect some Japanese households.

The Japanese economy is still in a stagnant situation, meaning it really hasn't grown that much or even at all for a significant number of years.

And then there is the idea of wage increases in Japan, but wage increases need to be felt by all Japanese workers and not just those in large Japanese companies. For example, its estimated that 70 percent of the Japanese workforce don't work for the large name-brand Japanese companies but small and midsize companies which tend to pay much less in wage increases.

Yes, the T administration has caused chaos all over the global arena and there seems to be no letup to the confusion.

There are no winners in a trade war and if the there is China/US trade war its going to affect all countries globally and there no one country that is safe.

It might not be the right time for the Bank of Japan to make any changes as the Japanese economy is maybe just waiting to see what is really going to happen.

Unfortunately T is not following normal procedures as T really doesn't have the power or authority to decide tariffs. as the US congress, is supposed to have the authority on tariffs and trade deals, but T is not a normal president following the rule of law or respecting the checks and balances of normal president.

Have a nice day!