Japan inflation accelerates in April on reduced energy subsidies
Ideas:
Government subsidies help some or many families but the problem is people become dependent on them to survive and when they are reduced or withdrawn people are back there the started at in the beginning.
And then add in inflation or increased prices and its even more stressful for many people and especially the low-income groups or the fixed income groups in a society.
Japanese households might be thinking when is it going to end, when are prices finally going to go down or level off as it seems they have been this way since the pandemic.
Most central banks try to keep inflation around the 2 percent level as they feel that is a good level for an economy and it's usually easily manageable, but in Japan it seems like its been above the 2 percent level for a very long time with no end in sight for Japanese families.
Most people, in a society don't follow the latest economic stats as they only know that the food they buy the clothes they buy keep going up and that is all they care about.
Perhaps the Japanese government needs to implement price controls into the Japanese economy on a temporary basis as a way to help Japanese families. For example price controls for a year so that Japanese consumers can have some kind of relief from the high prices.
Japan is resource-poor country which means they have to import all that they need including oil and gas along with all of the food that they need, which of course means they might be subject to the increases or decreases of global prices.
Government subsidies, again, are good and maybe needed. but society can get addicted to them and when they are reduced or withdrawn most citizens are back where they started.
Prices increases on food might be very stressful for some families and some families might not even notice the price increases. But it's always the low-income groups and the fixed income groups that feel the prices increase the most in a society.
Rice has been a major stress for many in Japanese society since last summer as somehow, whomever, hasn't been able to correct the situation with constant shortages, or hording by supplies or any number of reasons for the situation now.
Sometimes price increases have nothing to do with material or energy cost increases but just normal supply and demand, which is when the demand for a product increases a lot companies of course will increase the price of that product.
Services are an intangible product and when a service increases the wages of their employees of course they are going to pass-on the wages increases to the next in the supply chain meaning usually the final customer.
Most service companies usually have very thin profit margins which means they have very little room for wage increases so they have no choice but to pass-on their costs to the customer.
The reason the US tariffs have had limited impact on the Japanese economy so far is because many businesses in the US that sell Japanese products usually have a two or three month supply of Japanese products including Japanese cars.
The impact will probably begin to get in some time later in the summer and then we might see US consumers begin to cutback on buying some Japanese products such as Japanese cars.
The increase in rice prices don't have anything to do with consumer demand as it seems supply mismanagement has been the major problem since last summer.
If demand for rice was normal or not related to the current situation, then yes, the BOJ might increase the key rate as a way to reduce consumer spending but that it not the case in this situation.
The BOJ should not add to the stress of Japanese society by increasing the key rate as this time and even if the tariff situation is decided in favor of Japan, again the BOJ should not add on to the stress of Japanese society or Japanese companies which at this time are all under extreme stress from the continued inflation situation.
Have a nice day!
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