Japan Core Consumer Prices in Feb. Updated April 5, 2025.

Japan core consumer prices in Feb. rise 1.6% on yr, lowest in nearly 4 yrs

Article source: https://mainichi.jp/english/articles/20260324/p2g/00m/0bu/013000c

Ideas

While its good that price increases were less than the BOJ 2 percent target but they might still be too much for some Japanese families, as the their disposable income has been depleted constantly almost since pandemic ended.

And yes, the Iran situation and the strait blockage is potentially going to affect Japan more than some other countries as has been suggested in other articles that have said both Japan and South Korea are going to be the most affected related to the oil crisis in the Middle East.

If you ask the average Japanese household or any household globally, they probably wouldn't have any idea what the consumer price index is, but they know prices and they can see and feel the price increases every time they go to a supermarket, or buy things on Amazon or even Walmart, or even Aldi online.

While subsidies are good for consumers they aren't necessarily good for wholesalers or in this case energy suppliers,  even the government as subsidies potentially can increase the overall government debt and eventually someone has to pay for the subsidies.

Once again, most families, even globally, don't know or really care about a central banks inflation target rate they just care about how much they have and how much its going to cost to buy something.

Inflation rates are oblivious to most consumers as they only want to know how much disposable income they have and how much is something going to cost. They might hear the media talking about this or that related to inflation but in reality it doesn't affect them until they go to the supermarket.

The BOJ might or might not increase interest rates as the new Mid East war might have some affect on their decision and now oil prices are too much for most consumers and businesses and other products are now becoming even more expensive.

But an increase in the key rate might not be able to change much as an increase in the key rate is dependent on consumers and businesses spending less but that might not happen this time.

And yes, strong wage growth, at least for the large-name brand companies might be enough to get the BOJ to at least consider an increase in the key rate.

The problem is, global trade and global logistics situations these days are all connected so whatever happens in the Middle East or whatever happens in China or even in South-East Asian countries is now felt everywhere in the world.

Even though Japan for the most part, is not a heavy car user country like the US it still has a lot of people using cars which means many families or individual consumers are going to be affected by the increase in oil prices.

But companies, train, subways might use oil and gas too for their operations and they too will feel the affects of the price increases. And lets not forget ANA or JAL and the increase in fuel prices for airlines as unfortunately, while some might try to keep prices down, they can only do it for so long before they have to pass-on their fuel increased prices to the ticketed customers at the  airlines.

Releasing stockpiles of course is seen as trying to keep supplies up so that prices won't get out of control. But the problem is energy or oil or gas suppliers think if there is any chance of a distribution they are going to immediately increase prices even if something hasn't happened just yet to protect their profit margins in the future.

In this case subsidies are good and probably needed but there is always a side affect and this case it might the Japanese government having to pay for the subsidies which might increase the overall government debt, which at the present time, might be the highest government to GDP ratio in the world or at least among advanced countries.

No one likes taxes on fuel or gas but sometimes, temporarily, it might be needed, but again consumes dislike fuel taxes and especially those who have cars, and it might actually be an incentive to drive less or not drive at all as public transportation in Japan is more that adequate.

All of the costs, being taxes on fuel, and increases in electricity bills are all major concerns for Japanese households and especially those whose incomes are less than what they should be which put extra stress on them which means they have to find ways to reduce their spending on other areas due the increase in fuel costs or even electricity costs.

Hopefully, as the article suggests this might be the beginning of the end of higher than normal prices in Japan and just maybe inflation will begin subside even more to the point that the average Japanese consumer and their disposable incomes will begin to increase enough that they can actually spend enough in the economy to help the economy grow again.

Have a nice day!