Japan Labor Productivity: Updated Jan. 2, 2026.

Japan 2024 labor productivity 28th among 38 OECD members, lowest in G7

Article source: https://mainichi.jp/english/articles/20251227/p2g/00m/0in/020000c

Ideas

Labor productivity is very hard to measure as its hard to measure service-type companies and or technology-related companies as there is no real measure as they don't produce products like manufacturing companies.

With that said, one measure that might be reliable is the hours worked per employee in companies as Japanese companies, or many of them, still have long work hours which is not very common today among many advanced nations other than some technology companies in the US.

Just because an employee stays at his desk or cubicle for 8 to 10 hours doesn't mean they are actually doing any real productive work, which seems to be very common in Japan.

Ever since the 2008 global financial crisis more and more companies have been transitioning to using more non-regular employees as a way to reduce costs and maintain their profit margins for the good of their shareholders but not necessarily for the good of their employees who should be the main stake-holders in a company.

And yes, many import and wholesale companies purchasing power has been reduced due to the weak Japanese yen, which put pressure on many companies to increase prices on energy and raw material products used in Japan.

And yes, there is a supposed worker shortage in Japan which could be affecting the productivity of many companies who can't fill needed positions and especially for some skilled positions while some companies just can't pay the needed wages to attract the workers they need for their company.

The use of AI in manufacturing companies is not so easy in Japan, as they still rely on humans to do most of the work, and especially in the smaller and mid-size companies that might only make or produce one type or product.

For the larger name-brand companies, such as Toyota or Honda, they probably are already using AI in their manufacturing process, but again, many small and mid-size companies might not have the resources, money, to move into using AI and it takes time to train new people, get new equipment. 

And there is the human factor involved as some or many companies, especially small companies, don't want to or can't replace their employees who feel they are valuable stake-holders in their company.

And to be fair, due to differences in culture among countries its unfair to measure apples and oranges or one country against another country and the Japanese workplace is not the same as the workplace in the US or even Ireland or any other country.

And at the same time it's not fair to measure price changes as how does a price of a product really have to do with productivity as a weak currency doesn't really measure a work place or manufacturing place. 

All that prices can measure or not, is the availability of needed products for a company and the purchasing power needed to get the products needed to do the work required in a company.

For many years, Japanese companies didn't really increase wages that much but the past two years they have increased wages significantly as a way to help their employees and maybe improve spending in the economy. 

But to be fair the wage increases, while needed, haven't really been that much of a boost as the Japanese economy is still being affected by higher than wanted inflation which reduces the disposable income of Japanese households which means they are not spending at the level needed to help the economy.

The Bank of Japan, while very conservative like most central banks, has begun to increase the key rate the last year or two as a way to try and reduce inflation but it hasn't really helped much yet.

Japan's overall wages are much lower than wages and salaries in other advanced economies but that is not necessarily a negative as each country has its own work and business culture and wages in the US might be higher but that doesn't make US worker better off necessarily, as there are other variables beside wages that might be more important for a worker.

Again, to be fair, its hard to measure the labor productivity of service-type companies which make up around 75 percent of all companies in Japan.

And again its not really fair to measure apples and oranges meaning measuring one country's service-type companies and another country's service-type companies and most economies today are service related economies and not manufacturing companies like in early part of the 20th century.

Have a nice day!

Japan Nov. Jobless Rate: Ideas Updated Dec. 29, 2025.

Japan jobless rate remains at 2.6% in Nov. for 4th month amid steady hiring

Article source: https://mainichi.jp/english/articles/20251226/p2g/00m/0bu/012000c

Ideas

Japan's unemployment rate at 2.6 is still one of the lowest among OECD economies or even advanced nations in the world. The US unemployment rate is around 4.6 percent as the US is presently experiencing less job growth but not so much job losses related to lay-offs.

The Japanese economy is in a supposed labor shortage situation at this time which makes it much easier to find a job, but the key is a good job with a good salary or wages and good benefits.

While Japan seems to always have a lot of jobs, for those actually looking for jobs, in recent times maybe there hasn't been enough good jobs with good wages or good benefits and Japan too, since 2008, has transitioned into an economy which prioritizes contract work and part-time work to decrease costs for many companies.

But it seems, just maybe some or many Japanese companies have seen the light have begun to hire workers offering better wages and salaries as the economy has been stagnant for a very long time and low wages or salaries has been a major reason for the stagnation.

Workers being dismissed was not that popular for a very long time in Japan as once a company hired a worker it was challenging to get rid of them. But now times as changed, somewhat, as many Japanese companies value shareholder value more than stakeholder or employee value and which makes it much easier to get rid of employees, especially if a company's profits margins are challenged they need to reduce costs and unfortunately, employees are the first cost to be reduced.

But then again, with 740,000 leaving their current jobs to look for new jobs means that finding a new job in Japan seems to be much easier these days, as workers wouldn't leave their current job if they knew couldn't find a job easily.

However, workers leaving their jobs was down by 3.9 percent which might means there are not less good jobs available to the hiring situation has leveled off and its now a little harder to find a good job in Japan.

And yes, it seems that maybe those looking or seeking a new job have found a new job and there are now less looking for work than before. 

But then again, job seekers might be seasonal as there some good times and not so good times  to look for a job in Japan as it all depends on what new jobs seekers are looking for and what they need or want. Some might not see anything out there and decide to just stay with their current job until they see there are better jobs available.

Just because there were 118 jobs for every 100 jobs seekers doesn't mean there were 118 good jobs waiting for new jobs seekers as some might only be contract work or even part-time work which most workers don't want.

But then again, there might be many good jobs depending on the type of work a new job seeker is looking for and the sector they want to work in.

Labor and material costs might be a major reason for less hiring in the 11 major sectors as for example the lifestyle and entertainment services sector is a service type company which means they have lower profit margins which means they can't afford to hire the best and brightest and with tight profit margins they can't offer the best wages or salaries.

Profits margins are major constraint for many sectors as they can't hire those they need or want and can't offer the best wages or salaries, which might mean, a supposed labor shortage in Japan new workers have a choice and look the best salary that they can find.

Yes the introduction of labor-saving technologies including self-checkout systems is a major disruption for some or many in the Japanese economy as maybe many workers doing checkout type work have been replaced with new technology.

Japan used to be an economy that valued customer service and taking care of the customer even at checkout counters or even at supermarkets or convenience stores. But maybe its now changing a lot as companies don't value workers as much now as valuing shareholders more then stakeholders or employees is more important as companies only think of the shareholder and their profit margins at the expense of their workers or stakeholders.

This is exactly what happens in South Korea as South Korea over a five year period implement as series of minimum wage increases and many small and mid-size companies just weren't prepared for the yearly wage increase.

The South Korean government did try to give subsidies to small and mid-size companies to help with the situation but many of them still faced challenges with many of them either laying off workers, reducing hours of workers, for not hiring any more worker new workers.

Some of them tried to use technologies for self-check out or even robots at some restaurants for food service delivery but for many companies they went out of business and its was just too much for them.

Have a nice day!

Japan November Industrial Output: Updated Dec. 30, 2025.

Japan November industrial output falls 2.6% on month

Article source: https://mainichi.jp/english/articles/20251226/p2g/00m/0bu/014000c

Ideas

Japan is still has a significant manufacturing base and as such the industrial output metric is very important for the Japanese economy.

Manufacturing in Japan, for the most part, is still heavily influenced by supply and demand and if demand for some products its down or decreased the industrial output metric is less than expected.

The powers-to-be in Japan always seem to use specific language that tries to be optimistic and not upset the financial markets in Japan and globally.

To say the IO is fluctuating indecisively, again, is being cautious and not giving any sign or hint that it could be worse, but to be fair it probably isn't as manufacturing can have it ups and downs due equipment maintenance and repair, supply bottlenecks and stoppages and even labor issues.

While other economics have transitioned to more a service economy and software technology economy, Japan seems to still be focused on hardware manufacturing even though it too has a size-able service economy along with growing technology economy. But it must be remembered that Japan, for many reasons, is not a software focused economy at this time.

 Again, manufacturing always has it ups and downs as it has it starts and stops along with  having to deal with the markets supply and demand side too.

The January estimation of an increase along with the phrase "excessively inflated" does not sound too optimistic for the manufacturing sector in Japan for January, but it can easily change quickly and a projection of estimation is just a guess about what might happen.

The seasonally adjusted index of 102 is still in the optimistic zone, even though there are some sectors down a little as manufacturing in Japan is still relatively robust.

Just because there is an output decline still mean all is negative, as again, there many variables that can cause an declined, as mentioned before equipment related issued, raw material related issues, and then supply and demand issues too.

Inventories is a tricky or complicated metric as both low inventories or excess inventories can be a signal that something is happening. For example manufacturing is based on estimations or projections for the future quarters or even a year in advance. 

If the estimation or projection related to supply and demand is off either way there could be an increase in inventory if the estimation was too little or an decrease in inventory if the estimation or projection was too much.

Have a nice day! 

Japan Nov. Duty Free Sales: Updated Dec. 29, 2025.

Nov. duty-free sales at Japan department stores down 2.5%

Article source:  Nov. duty-free sales at Japan department stores down 2.5%

Ideas:

Duty-free sales are never a constant and there is always going to be ups and downs in 

spending as consumers sometimes want to spend a lot and sometimes they want to spend as 

as little. It all depends on the mood of the shopper.

Yes, unfortunately the Chinese situation is going to affect Chinese tourist spending in Japan

and it could take some time for the situation to calm down and Chinese tourists will return 

to Japan in full force.

Chinese tourists are at the mercy of the Chinese government and as such they will not go to Japan, at least in full force, until the Chinese government and Japan reduce the tensions between the two countries.

Telling Chinese people to exercise caution is almost mandatory as most likely most if not all Chinese are going to avoid taking a trip to Japan at this time. Other Asian countries, including South Korea, could see an increase in Chinese tourists who might have wanted to go to Japan but had to change their travel plans.

Whether good or not so good, depending on which side of the coin you are on, Japan keeps doing things that upset not only China but South Korea too as Japan takes one good step ahead in diplomatic relations and then ten steps back with some miss-step every few years.

There might be a sliver-lining in the decrease in Chinese tourists coming to Japan as recently there have been a lot of negative ideas in Japan about over-crowding with too many foreign tourists in some of the main tourist areas such as Kyoto, Osaka, and Tokyo.

With less Chinese tourists the noise about too many tourists might begin to calm down some and things might be able to get back to some sense of normalcy, at least for the short-term.

There is no doubt that foreign tourist spending in Japan has helped boost the Japanese economy and opponents of foreign tourists in Japan need to be very careful that they don't go too far and with measures to either tax foreign tourists and or other measures that might turn-off foreign tourists from visiting Japan as tourism is a fragile industry and can change very quickly even in Japan.

For example, South Korea, just up the road is a like-able place for Asian tourists to visit and they too are seeing record numbers of Asian tourists visiting. So Japan needs to be very careful as there is no talk about over-crowding in South Korea or discussions about taxing foreign tourists.

Again, things can change very fast and Japan needs to be thankful for all the foreign tourists they get and all the money they spend in Japan that helps the Japanese economy, as it could be very different if they aren't careful.

The Japanese economy, especially the domestic economy, needs all the help it can get and foreign tourist spending money in Japan is a significant boost and without it Japan's economy might continue to be stagnant and grow very little if at all. 

Have a nice day!

Japan and GDP Per Capita: Updated Dec. 31, 2025.

Japan slips to 24th in GDP per capita among OECD members amid weaker yen

Article source: https://mainichi.jp/english/articles/20251223/p2g/00m/0bu/032000c

Ideas:

Japan's GDP per capita has been decreasing almost every year since the 1980 boom years when it was near the top of advanced nations. But Japan's productivity, innovation, and basic wage growth has decreased or not changed much in decades.

And then add in its GDP growth rate which since again the 1980's hasn't been that great as the Japanese economy, while being very stable, has really seen much growth in almost 30 years beyond a 1 percent growth or a 0.5 percent growth as the very best.

What Japan doesn't want to know or hear, is it needs a sustained immigration policy to bring in needed and wanted immigrants who can help the Japanese economy grow with new ideas, sustained spending and many other ways, that before the current situation in the US, immigration was the backbone of growth in the US.

But as has been suggested recently, Japan is afraid of losing its unique culture and thinks it will be over-run with the cultures of other countries, mainly other Asian societies and cultures. The  only answer to that is there are many unique cultures in the US and the US culture has not been over-run but there are many different pockets of cultures that thrive in the US.

Again back in the 1980's Japan was near the top of GDP per capita but it seems Japan has lost its way and hasn't been able to move forward the last 30 years. Its like Japan might have grown too fast in the 60's, 70's, and 80's without developing a solid economic foundation for the future.

It seems Japan has been resistant to real change in its economy as maybe too many businesses in Japan are still stuck back in the 1990's and not wanting to move forward into the 21st century.

For example the fax machine and paper documents were the king in Japan for many decades and it wasn't until maybe 2020 when some began to do away with fax machine in their companies. But at the same time there are still many companies that use a fax machine.

Yes, Japan might still be the fourth-largest economy but soon India, an up and coming economy, is going to pass Japan very soon.

Japan has an ageing society problem, like many advanced countries do now such as South Korea, but many countries are trying to implement changes to slow down the ageing situation.

If a population is aging quickly and the birthrate is not where is should be immigration is the next best solution but, while Japan has been admitting more immigrants, the pace is not fast enough to really see any real changes in its economy.

Japan, unfortunately, is losing its influence on the world stage in both its political and GDP growth as it seems Japan really isn't doing much to improve its overall situation.

Some in Japan, not all but some, seem to be content, or even resigned to the fact that the Japanese economy, with its shrinking population and stagnant economy, is where is going to be for the long-term with no one really seeing the need to improve or change and basically have an insular mindset and they think maybe its the best we can do.

Have a nice day!

Uniqlo to Increase Starting Salary: Updated Dec. 29, 2025.

Uniqlo operator to raise starting salary in Japan to 370,000 yen

Article source: https://mainichi.jp/english/articles/20251222/p2g/00m/0bu/038000c

Ideas

Fast Retailing Co. seems to be a more progressive Japanese company and not a traditional Japanese company that is still stuck in the past.

The company seems to know that their employees are the real stake-holders for a company not the shareholders that so many company are help hostage to these days.

And they know that Japanese households and even individuals deserve a fair wage and not the pittance that most Japanese companies give to employees just staring out. That doesn't mean they have to follow what western companies are doing but they need to be more fair with their wages and wage increases for the good of Japanese society. 

That seems to have been lost in Japan as Japanese companies, unfortunately, have become too much like western companies and only care about their shareholders and not their employees to are the real stake-holders in and company.

Recently, or so it seems, overseas transfers have become very unpopular and some or many new graduates don't want to work overseas. It could be because of low English skills, it could from being unable to adjust to a new work culture, such getting along with foreign staff who don't think or do things the same as Japanese workers or companies do.

Whatever the reason, today young Japanese graduates just aren't as adventurous, as those many years ago as they saw the need to go to other countries to gain knowledge of the world and or better themselves. Today's young graduates, for the most part, are too insular and don't want to experience what the world has to offer them in terms of betterment or improvement.

Again, Fast Retailing seems to be ahead of the curve in terms of wage increases and they seem to know, for the good of the Japanese economy, Japanese households and even Japanese individuals need a wage that is livable which gives them room to do things that as normal Japanese wage or salary can't these days.

Its not the best thinking to think that large name-brand companies can't do the same as Fast Retailing as many companies are constrained by their shareholders from giving the same wages increase that Fast Retailing has done since 2000. 

Yes, many Japanese companies might want to do it but their profits margins, which again are constrained by shareholders getting all they can get at the expense of company employees seems to be the main obstacle for other companies doing the same thing.

Even at 280,000 yen per month is better than many companies, to be fair, but its not that bad too, as Japanese employees get two bonuses a year, which usually equate to a extra monthly salary in May and in Nov. or December.

And many new employees might still be living at home with their parents as rent and housing can be very expensive for new graduates in japan.

It must be remembered that its impossible to compare apples and oranges and or compare US starting salaries or EU starting salaries with Japanese starting salaries as the work and economic cultures are very much different.

Have a nice day!

Japan Convenience Store Sales: Update Dec. 26, 2025.

Japan convenience store sales up 2.4% in Nov. on Black Friday promotions

Article source:  https://mainichi.jp/english/articles/20251222/p2g/00m/0bu/033000c

Ideas

Japan's convenience stores are the envy of the world with many foreign tourists visiting them to see just how different they are compared to convenience stores in their home country,

Its no surprise that sales rose as not just Black Friday sales but again as foreign tourists go to Japan going to a Japanese convenient store is a go to event to see what they have and what they are all about.

It's not just Japanese convenience stores that are unique but Japanese supermarkets too with their huge selection of almost anything and everything.

A person could almost eat from a convenient store as they have almost everything that might be considered healthy for a person.

Of course the low prices also attract many Japanese customers such as workers going to and from work and they buy their lunch sets, or bentos, before they go to work or stop in the conbini or convenience stores on their way home.

Yes, Japanese convenience stores have almost everything that a customer might want and the prices are reasonable not too high but high enough for the convenience store company to make a profit.

Convenient stores in the US are much different due to the fact that US is a car culture while Japan is more of a walking to and from culture where you walk to a convenience store in Japan while you drive to a convenience stores in the US. 

And to be fair, maybe it's not the fault of convenience store owners in the US, but Japanese convenience stores are decades ahead of US convenience stores in many different areas.

And yes, inflation might be a challenge for some Japanese convenience stores too as Japanese consumers might be cutting back on some products as their disposable income gets less each year to due inflation.

But when all is said and done going to a Japanese convenience store, if you have a limited income, is still the best option if you are trying to save money or limit how much you spend.

Have a nice day!

BOJ Expectations: Ideas Later. Updated Jan. 22, 2025.

What to know about the possible impact of Japan's rate hike

Article source: https://mainichi.jp/english/articles/20251219/p2g/00m/0bu/031000c

Ideas

There are always positives and negatives with a rate increase but the BOJ, like other central banks, are hoping there are more positives than negatives for an economy.

In this case, the main focus is to reduce inflation which might require less consumer spending, less business capital investments or spending and less going to a bank to get a loan in Japan.

But then again, there are going to be some positives such as more interests on savings deposits, more profits for banks potentially, and more long term positive affects if the Japanese economy stays the course.

There are always going to be risks even after rate hikes, but most central banks are hoping the risks are somewhat diminished if not completely eliminated.

And yes, most central banks want inflation to be around 2 percent as that is the rate, accepted by again most banks, that is considered a good amount of inflation to keep an economy moving in the right direction.

If inflation were less, such at 1 percent, a central bank might think an economy is moving too slow and might need to decrease the key rate to help stimulate an economy.

If inflation was 4 or 5 percent a central bank might think an economy is moving too fast or even in the hyper-inflation range and will try to slow the economy down with a rate increase.

The Bank of Japan, for many years has suggested that the Japanese economy was just too weak for rate increase despite having higher than normal inflation and also felt the Japanese economy was just too stagnant and there were just too many side effects for many in the economy to overcome if there was a rate increase.

But what has happened as the US continued to increase its rate while Japan continued to delay any rate increase was a significant variance between the US rate and the Japanese rate which potentially has caused the Japanese yen to weaken significantly which means import prices in Japan are now higher than normal.

The Japanese economy is a very stable economy and is not subject to suddenly ups or even too many downs. But as a mature economy, as with most mature economies, it doesn't grow or expand that much as even a 0.5 percent increase would be exceptional for it.

At the same time, the Japanese economy is very complex, like most economies, and there are always going to be some bright spots and of course some not so bright spots.

Business sentiment, like consumer sentiment always has its ups and downs during the year and one up doesn't make a year and one down doesn't make a year, as business sentiment needs to be seen for a full year to really see what is going on.

Despite the economic bubble burst in the early 1990's, the Japanese economy, again has remained stable except for the one period when the asset market collapsed. 

But of course some would say the Japanese economy has back-tracked and more or less gone into a stagnation phase and deflation has been the most common affect of stagnation in Japan recently.

And yes, low interest rates maybe were needed at the time to get businesses and consumers to spend again to help boost the economy.

Back in the 1980's and early 1990's and beyond the Japanese government used the government spending strategy to try and get the economy moving again, but all it really did was increase the national debt and now its almost triple the size of the economy or GDP.

The powers to be in Japan have known for decades that Japan's population was ageing fast and maybe one of the fasted aged populations among OECD countries but for good or not so good has not been able to do much for stop the decline.

Even as weak demand increased and companies began to lower their prices to get more consumer spending, Japanese consumers didn't spend that much more and the aged don't really spend much as their needs are much different from the younger groups.

And then there is and was the wage freeze where companies around 2000 decided not to increase wages as a way to compete with China and its economic boom. What happened was an entire generation of Japanese salary workers didn't get enough of a bonus or wage increase t to really spend in the economy to help the economy grow.

And as businesses seeing less sales and less profits they too begin to cut-back on investments which further hurt the Japanese economy.

Back in 2013 and since then, the BOJ has been trying to find ways to improve the Japanese economy, but despite their best efforts nothing has really worked or at least not long-term.

And when covid it and right after that many central banks began to increase the rate to deal with inflation but many in the BOJ suggested the economy was just too weak for rate increases as there were just too many side-effects that could affect the businesses and consumers in Japan.

But eventually the BOJ did eventually decide to gradually increase the key rate but again not  much has really changed in the economy even though the BOJ keeps trying to improve the situation.

Japan is a resource-poor country which means it has to import much of what it needs but at the same time the weak Japanese yen is both a positive and a negative too.

For Japanese exporters they can get more yen for their products in overseas markets and the yen increases the price of products but for importers and the domestic economy its a negative as a weak Japanese yen, increase the price of import products and importers and wholesalers pass-on the increased prices to those in the supply chain including the final retail customer.

And yes, many Japanese companies and many companies globally, including Chinese companies, trade in US dollars and not their own currencies as it gives them more value.

Yes, inflation has been a constant for businesses and Japanese households almost since the pandemic started but again the BOJ has not been able to do anything about it despite their best efforts. 

Some would think or might think that the BOJ has taken a hands-off approach to inflation meaning some might think the BOJ is just letting inflation run its course and let it die out naturally as maybe any real kind of rate changes or other strategies might be more harm than good for the the economy.

Of course the conventional idea is higher rate hikes meaning higher interest rates will push the yen higher which could help to reduce import prices but at the same time decrease the profits of Japanese exporters too.

If the BOJ follows the strategies of the EU or the US then yen, they will begin to increase the key rate on a regular basis but that has not happened yet, as the BOJ might still be concerned with the side effects of what might happen with persistent rate hike on Japanese consumers, businesses, and banks in Japan.

But still there is the idea of the Japanese yen, depreciating even more which is going to be a further concern for the domestic economy but of course a positive for Japanese exporters.

So the BOJ has to make a decision of what is best for the economy, let the Japanese yen remain weak to help the large Japanese export companies or try to get it to appreciate to help the domestic economy and wholesalers and importers.

The Japanese yen and the US dollar are still too far apart or the variance is just too much which means the Japanese yen is still going to remain weak until the variance between the dollar and yen is reduced.

And maybe world markets, for the most part, have given up on Japan, in some cases as they just don't see it anymore as a reliable player in anything related to the global markets as Japan has been stagnant for too long and hasn't really done much lately.

There are always many strategies that traders try to use to again an advantage in the market place but more if not all usually have short-term benefits and the timing of when and how to the trade takes places it always the key.

Of course the BOJ and with any central bank they know that even small changes in interest rates can significantly effect many things in an economy including so-called trades so they are very cautious on what they do and especially what they say as even the wrong word or sentence can change markets.

Bitcoin trading is still in its infancy as it needs more time before it becomes a main stream trading commodity as regulations in many countries are just not strong enough or the powers to be just don't have enough information on what do to with bitcoin trading at this time.

Unfortunately there have been, as always there who take advantage to the cryptocurrency situation with less than needed regulations to rig the trades in their favor and or rig the trades in the favor of companies that can do it.

Yes, the timing and scale of changes in interest rates is always a concern for central banks as they know even a small change can have significant effect some in an economy.

And they know that increasing or decreasing the key rate doesn't mean things are going to change instantly as it takes week if not months for the ripple effects to take place in an economy.

And of course they always struggle with what is best for businesses and what is best for consumers and what to do to create jobs and of course trying to reduce inflation all at the same time.

Yes, the US tariff situation caused the BOJ to pause any future increases in the key rate as they wanted to see what effects the rates would have on Japanese exporters and specifically businesses in Japan.

But at a new deal came into affect they are further watching what is going to happen as even the 15 percent tariff rate can have significant effects on some business in Japan.

Normally most central banks want to see inflation at or around 2 percent as they feel that is a percent that is both good and manageable for an economy.

But at 3 percent it might be more than most central banks want to see and the BOJ might be taking their time, as they usually do, to decide when or how to try and reduce inflation, as they are always concerned with the side-effects on businesses, Japanese households and or course banks in Japan.

Have a nice day!

Japan Core Consumer Prices: Updated Dec. 24, 2025.

Japan's core consumer prices in November rise 3.0% on year

Article source: https://mainichi.jp/english/articles/20251219/p2g/00m/0bu/010000c

Ideas:

Japan is a resource poor country and has to import much of what it needs including raw material for the production of food products. At the same time, the Japanese yen is very weak an a weak yen drives up import prices. Importers and wholesalers then will pass-on the high costs of imports to the next in the supply chain including the final retail customer.

Yes, the inflation rate is above the 2 percent target of the BOJ but they haven't done much about it yet but it is expected they will move soon to try and reduce inflation in Japan.

In relation to energy prices, again Japan imports most of its energy as its not a oil producing country which means is potentially subject to global oil prices or oil supply and demand.

The BOJ has increased the key rate a few times but despite the few times it has done it inflation has not decreased much or not at all. 

The challenge for the BOJ is that they have suggested many times, or at least in the past, that the Japanese economy is/was too weak to handle any rate increases and or a large rate increase that might damage the economy with a lot of side effects.

So Japanese households and Japanese consumers suffer with high inflation which reduces their disposable income to buy other things in the economy besides just paying their bills or buying basic food products they need.

An in increase of 3.0 percent might not seem like much for the lower-income groups or the fixed income groups, or those who only have part-time jobs that could be a lot and could force them to makes changes in what they need or what they buy in the future.

There is no easy answer to inflation in Japan, in the EU, or in the US as inflation has hit all areas of the world with equal force lately,

US consumers are struggling with what is called an affordability crisis, meaning higher than normal food prices, higher than normal housing prices, and higher than normal prices on everything.

The rice situation is very perplexing as rice is the main staple of Japanese homes and it seem odd that the powers to be in Japan haven't been able to keep prices down as its a main food ingredient like milk, bread, eggs, and some meat in other places.

Yes, raw materials costs related chocolate and even coffee has increased globally to where prices are high everywhere in the world for chocolate and coffee products these days.

Rice balls or using the phrase onigiri, which is a basic rice product at most Japanese convenience stores has probably increased too but not to the point for most convenience stores shoppers in Japan.

Japan needs a different strategy to handle energy prices like some kind of energy trade agreement with energy producing countries so that it isn't at the mercy of global energy prices or at the mercy of the weak Japanese yen which increases import prices which oil is a major import as Japan has to import much of what it needs.

It seems odd that Japan hasn't developed some kind of FTA agreement with oil producing counties or found ways to limit the ups and downs of global oil prices that can affect Japan a lot.

The weak Japanese yen is a double-edged sword as the weak helps Japanese export companies but hurts Japanese import companies. The powers to be seem to be favoring the Japanese export companies, lately, as weak yen increases the price of Japanese products overseas, which at the same time increases Japanese current account, which essentially increases the money that the government can use and spend.

So the powers to be might not be favoring Japanese exporters they haven't done much about the weak Japan yen at this time to help Japanese importers or Japanese import prices.

To be fair, while every Prime Minister has tried to help the Japanese economy and help Japanese households, nothing recently has really helped even though they might have passed similar budgets with just short-term results but not a lot of long-term results.

And even though a new budget was passed it could take months to see any evidence of it helping the Japanese economy if at all.

Have a nice day!

BOJ Rate Increase: Updated Jan. 6, 2025.

Bank of Japan lifts policy rate to 30-yr high of 0.75% amid persisting inflation

Article source:   https://mainichi.jp/english/articles/20251219/p2g/00m/0bu/018000c

Ideas

The Bank of Japan wouldn't increase the rate unless it was confident that there won't be too many side effects to the Japanese economy. And at the same time trying to get the key rate closer to the level of the rate of other advanced economies.

Most economies when inflation is consistent will use the strategy of increasing the key rate as a higher rate is motivation not to take out business loans, consumer loans and using credit cards.

The BOJ is hoping that wage growth can help with the improvement of the economy and spur some kind of economic growth while the higher key rate might actually reduce some spending in the economy.

The Bank of Japan tries to ensure, with its communication, that whatever it says and does doesn't cause harm or upset both the domestic financial and global markets.

At the same time, it seems, as usual, with most central banks, it has kept some sense of the unknown what its going to do next as it wants to give itself room to change and maneuver as needed in the future.

The Bank of Japan, for the most part, is still has a dovish stance but it also gives itself room to make changes including increasing the key rate as needed to combat inflation of help the Japanese economy improve.

The Bank of Japan is in a difficult situation as it knows increasing the key rate can cause the bond yield to increase and at the same time might cause the Japanese yen to become weaker but its like a doctor prescribing a pill or medicine knowing full well there are going to be some side effects., but ultimately the potential for improvement is what the BOJ is looking for.

Japan is a resource-poor country and has to import much of what it needs, as as result a weak Japanese yen increases the price of imports, which are then passed-on in the supply chain including the final retail customer.

Again, the BOJ wouldn't increase the key rate if it felt that there is the possibility that it can help reduce inflation and help improve the Japanese economy.

But at the same time, its not a 100 percent guarantee that the rate increase will do what it supposed to do, as for example other advanced economies have increased the rate and its not a 100 percent full-proof remedy to reduce inflation and or improve an economy.

And yes, wage growth or companies increasing wages is not a full-proof strategy to help the economy, as to be understood, only about 30 percent of Japanese workers work for the large name-brand Japanese companies and the wage increase mainly goes to large company workers and the small and medium size company worker, which make up the other 70 percent of the Japanese workforce, usually get smaller wage increases which may or may not be more that what the inflation rate is in the economy.

There was always a goal or strategy for the lower borrowing costs, as the BOJ felt the Japanese economy at the time, was never really strong enough to handle a rate increase and that there would be too many side effects to the Japanese economy, so the reason for the low key rate for almost a decade. Was it the right decision at the time is difficult to say and running experiments on a an economy to see what would work and not work is not the same a running an experiment in a science laboratory, as all economists have to go on is observation related to what they do as see.

Deciding what it the real reason for inflation whether its cost-push factor or other factors is not easy to determine and the BOJ might be right or it might off a little as inflation could actually be above the 2 presence level. 

Most central banks want inflation to be around 2 percent, not much more, as they feel it's a manageable level where money is flowing through the economy at a good rate, not too fast and not too fast. 

Any slower they feel the economy is moving too slow and money or transactions are not enough and moving too fast or spending has become too much they might feel an economy is becoming over-heated.

Financial markets, both domestic and global watch what the BOJ is going to do almost everyday including what they say as what they say is usually clues to what might happen in the future.

As a result most central banks are very cautious or are very reserved with their communication  to public as they don't want to say or signal anything that can harm to markets or cause a 24 hour global move in the financial markets.

And again, to eliminate as many side effects as possible the BOJ or most central banks will not increase the rate anymore than is necessary as even a slight increase can have significant effects on an economy. So, if using the key rate and keeping it in its neutral zone is the best strategy that is what central banks will do.

And again, the BOJ is on purpose not saying where the neutral levels are as it wants to keep its options open and at the same there is always a level of uncertainty to where the real neutral level is or where is should be.

And yes, in theory, a rate hike potentially is supposed to cause borrowing to be more expensive, supposed to reduce spending, and supposed to reduce investment but at what level of each going to be reduced is always the key question and how long its going to take to reduce inflation or stabilize prices is again the key question, as at times is very hard to answer, as the BOJ or any central bank is dealing with human behavior and humans at times can be very unpredictable.

The current Prime Minister of Japan is a supposed fiscal dove which means she favors economic growth through government spending and even including keeping the key rate low.

But in this case, it seems she might be in favor of increasing the rate as a way way to help the Japanese economy as inflation as been continuous almost since the pandemic started and hasn't gone away just yet.

And of course a rate increase could cool the Japanese economy but again its seems to Prime Minister is willing to give the BOJ a chance with rate increase and see if it can reduce inflation and improve the economy.

Yes, for a very long time, while other central banks including the EU central bank and the US Federal Reserve were increasing the key rate many times since the pandemic the Bank of Japan kept its key rate almost at zero, as again it suggested the Japanese economy was just too weak to handle a rate increase and there were just too many potential side effects.

And yes Japan's fiscal health is always an issue whenever the Japanese government needs to increase spending to help the Japanese economy.

But the problem is the powers to be in Japan have used government spending for so long that it seems it feels there is no other way to help but to spend its way out of trouble.

Th problem is the powers to be in Japan know that its fiscal health is not the best and it has the highest debt to GDP ratio among advanced economies but feels it has to prioritize helping Japanese families and Japanese businesses over improving it fiscal health.

Have a nice day!