Japan June Wholesale Prices: Updated July 13, 2026.

Japan wholesale prices up 7.1% in June, fastest rise in over 3 years

Ideas

Up recently many Japanese companies were reluctant to increase prices as they felt customers were very important to their business and they felt an connection to customers and society to keep prices down somewhat.

But those days seems long gone, as profits margins become very think and companies can no longer absorb their costs and now they have no choice but to pass-on their costs to the next I the supply chain.

And yes, the Middle East situation is affecting numerous industries globally and for the most part, it looks like the effects will continue on for a long time.

It's easy to say companies should have always have had alternative sources but finding the needed or exact alternative sources at the right price can be a challenge for many companies who have limited resources and limited profit margins.

However, companies, for the most part, especially as Japan is a resource-poor country, should always try to have alternative sources these days as the global environment is just too volatile and is always changing and sometimes not in the favor of some industries or companies.

Yes, not just products directly related to crude oil but now consumer goods that might be made indirectly from oil type materials are now seeing prices increases as companies can no longer absorb the increase in raw material or finished material prices and have no choice but to pass-on their costs to the next in the supply chain including the final retail customer.

Unfortunately, these days, even some companies that might have products that have no direct link to the Middle East situation might use it or rationalize it that their products are being affected indirectly and also will increase the prices on their products, as a way to squeeze out more profits.

Of course packaging products are significantly being affected by the situation in the Middle East and to change packaging, which is a form or advertising, might be very difficult and it takes a lot of time to change to simple packaging or alternative forms or packaging.

The challenge might be customers who identify products with colorful packaging might not be able to find the products they want or need if they can't see the same packaging which maybe for the elderly or fixed income customers could be difficult for them.

Global prices, ever since the pandemic seem to be increasing monthly or even at least yearly as companies, now days, just seem to continue to increase prices to keep their shareholders happy with no regard for customers as it seems customers are now not important as companies only care about what their shareholders want or need.

The Bank of Japan, at least on the surface, does seem to care about society and the overall affect that increasing the key rate will have and are trying to keep the rate as low as possible so that the key rate side affects don't have that much of an affect on Japanese society and the economy.

Again, many companies in Japan, back in the day, used to be very reluctant to increase prices as customers, along with employees were considered important stakeholders for the company and increasing prices was sometimes seems as being disloyal to customers, but those days seem long gone as profit margins continue to decrease and companies are putting a lot of emphasis on keeping shareholders happy and not company employees and especially customers who no longer the most important component of their business.

Japan is resource-poor country which means it has to import much of what it needs and is subject always to global price fluctuations and the weak Japanese yen, which helps Japanese export companies hurts import prices and the overall Japanese domestic economy.

But its interesting that the Bank of Japan is very aware of this situation and seems, at this time, to be favoring Japanese export companies as exporters can get more yen or dollars for their products in overseas market, which significantly increase Japan's current account.

At the same time, as the Japanese yen, remains very weak and foreign tourist numbers keep increasing in Japan the BOJ is thinking that foreign tourists and the weak yen, which increase the purchasing power of foreign tourists, will be a significant boost to the Japanese economy and the BOJ doesn't really need to do anything about the weak yen at this time.

Have a nice day!

Article source:  https://mainichi.jp/english/articles/20260710/p2g/00m/0bu/022000c

BOJ Economic Assessment: Updated Oct. 12, 2025.

BOJ retains economic assessments of 8 regions, but cuts view on Hokkaido

Article source: https://mainichi.jp/english/articles/20251006/p2g/00m/0bu/043000c

Ideas

Not every province or region in Japan is going to be up as some might be down due to differences in economic activity in each region. 

The major metro regions of Tokyo, Osaka, and Nagoya, of course have the most economic activity but some regions or province, might actually be on some kind of life-support, meaning economic activity in those regions have been and less and the populations in the smaller provinces might keep decreasing.

The Bank of Japan doesn't want to say anything really negative about any province or region as they don't want to influence businesses or investments from not going to those regions.

So they use phrases as a "recovering moderately" or "picking up" or "picking up moderately to smooth out anything negative, when if reality some or the more rural provinces or regions, for a long time, have been struggling mostly due to a population decrease as citizens the rural provinces have been moving to the larger metro areas to find jobs.

Manufacturing in Japan, by both small, medium, and large companies are in most of the provinces in Japan but some of the small and mid-size companies might actually be just barely hanging on as the cost of raw materials keeps increasing along with some companies having challenges actually finding workers due to the fact they can't afford to pay the wages needed to attract new workers.

And yes, the tariff situation might actually be affecting many of the manufacturing companies in Japan and especially the small and mid-size companies that don't have a lot of resources to either overcome the tariffs and or outlast the tariff situation, which many of the large Japanese companies can do.

In the larger province with the larger metro areas, companies are probably doing somewhat OK but its the smaller provinces that companies might be having a lot of challenges as maybe they don't even have the capital to innovate or improve their situations as again, they might keep losing workers due to the fact workers, now days in Japan are able to look for better wages and they are moving to the metro areas for better jobs.

Many companies don't have a choice as maybe their profit margins are already stretched thin due to increased raw material costs and then add in the increase in wage increases which has caused many companies to have very thin margins and then add in the tariff situation and companies have no choice but to pass-on the tariffs to the next in the supply chain.

Even Japanese company domestic customers might be feeling the affects to the tariff situation as again, companies might have been stress out due to increase material costs, increased energy costs, and then add in the wage increase situation so any Japanese companies that has both domestic customers and US customers already have thin profits margins and so companies might be spreading out the tariff costs to all customers in the supply chain both domestic and US chains.

Its only natural as prices increase demand for products decrease as its just supply and demand, and unfortunately there is always going to be some customers or consumers who look for bargains, look for substitutes and or decrease their spending where they can.

Restaurants, being service type companies, have very thin profit margins and usually have no choice but to increase prices and they usually can't absorb the material price increases like large companies can.

And supermarkets are probably in the same situation as they too usually have very thin margins and can't afford to absorb any costs the incur and they are usually some of the quickest to pass-on their costs the the customer.

There could be many reasons for the decrease in spending by foreign tourists in the Hokkaido area such as increased airline prices, and change in the tourism tax situation, the change in the new visa system in Japan, and of course even the change in foreign spending habits which could affect spending in Hokkaido.

And then there is the idea that Hokkaido is a relatively far off-place from the Tokyo metro area or even the Osaka metro which includes. Kobe, Nagoya, and Kyoto.

The bulk of foreign tourists probably don't want to go to Hokkaido but want to go to either the Tokyo area or the Osaka area for the trip to Japan.

Have a nice day!

Japan Real Wages: Updated June 7, 2025.

Japan's real wages in April fall 1.8%, down for 4th straight month

Article source:  https://mainichi.jp/english/articles/20250605/p2g/00m/0bu/016000c

Ideas

The Japanese economy and Japanese households are in a difficult situation as inflation continues on in Japan since the pandemic and wages while improving haven't been able to keep up with inflation.

The problem started many years ago when as its been suggested that Toyota back in the early  2000's decided not to give wage increases and then all other companies followed suit and then it almost became a yearly situation.

Maybe if wages had been paid yearly Japan might not be in this situation now. 

Nominal wages include inflation so it shows that inflation had increased by 2.3 percent for the 40th straight month, which is not good for Japanese households, low-income and fixed income groups in Japan.

Real wages the real purchasing power of Japanese households and not nominal wages as they only show the results of inflation in the economy.

The spring wage negotiations might have been good for some companies but all companies, such as small and mid-size companies probably didn't get the same wage increases as the large name-brand companies in Japan.

It must also be remembered that up to 70 percent of the Japanese work-force don't work for the large name-brand companies in Japan, but small and mid-size companies, which again, don't have the resources need to pay the same wages as the large companies.

Japan used to be a de-flation situation where prices were low and continued to be low as a result of low consumer spending in Japan and because of the continued lack of wage increases over many months and years in Japan.

Perhaps, as in any society, Japanese consumers go used to the low prices and now with 40 months of continue price increases, Japanese consumer are not spending in the economy as they normally would.

Workplaces of five more more employees would probably be considered a small company, and again small Japanese companies just don't have the resources needed to pay the same wages as the large Japanese companies do.

And then add in the price increases for the 42nd straight month and consumer purchasing power in Japan is even less than normal.

Yes, the wages increases might be reflected in the wages some, but they are still over-shadowed by the continued inflation in Japan that doesn't seem to be ending anytime soon.

The problem is Japan is a resource-poor country which means it has to import much of what is needs from energy to food and if global prices are higher than normal and if the Japanese yen is weak, that means prices in Japan are going to even higher than normal.

Consumer spending in Japan is around 50 percent of Japan's GDP, which is less than the 65 percent of GDP in the US. Which means maybe consumer spending in Japan is just not large enough to really drive economic growth.

If consumer spending in Japan were 50 percent or even 57.5 percent that might be enough to reach the economic growth needed in the Japanese economy.

But yes, without continued wage growth consumer spending in Japan is not going to improve enough as Japanese consumers are not going to spend if they don't have enough disposable income left after paying their monthly bills.

The Bank of Japan for many years, maybe since 2012, has been using a monetary policy of almost zero percent interest rates to improve the Japanese economy without much success. 

It was a good strategy but it just didn't work and the Japanese economy, at that time and now has been stagnant and hasn't really improved in its growth.

Moving to a normalization of monetary policy too might not work as the BOJ has increased the key rate twice over the past year and again without much real affect on the Japanese economy, as inflation has continued to increase yearly.

Increases in July, November, and December was good and needed but they didn't overcome the 26 month decline in real wages which is very important for Japanese consumer spending power in the Japanese economy.

If Japanese consumers don't have enough extra income or disposable income after paying their monthly bills they are not going to spend in the Japanese economy such as entertainment, eating out at restaurants, online shopping, and of course summer trips this summer during the Obon season.

Have a nice day!

Bank of Japan Ideas: Updated June 1, 2025.

BOJ should take cautious stance on rate hikes: board member

Article source: https://mainichi.jp/english/articles/20250522/p2g/00m/0bu/028000c

Ideas

Most central banks are very conservative and the Bank of Japan is no exception as it might be the most conservative, as for example while other central banks, globally, were decreasing its key rate, the Bank of Japan was not as it suggested the Japanese economy was too weak at the  time to decrease rates.

Every economy is different and has it own unique qualities, and has to be seen as such, and the Japanese economy is similar very much different from other economies as just because the US or the EU cuts or increases is rate doesn't mean the Bank of Japan should do the same thing.

Yes, the Bank of Japan needs to examine the data and especially the data that might be affected by a rate increase or decrease. And even more importantly the BOJ needs to examine the mood of the Japanese business community and Japanese households related to a rate increase or decrease to see what both group feel or need from the Bank of Japan.

Any time a central bank increases or decrease the key rate, its takes some time for the affects of the increase or decrease to be seen in an economy. Its not an overnight action as it could take months for any action to be seen in an economy.

Because the Japanese economy was in a stagnant mode or more importantly as deflation mode, or continuous low prices, the Bank of Japan was very reluctant, back then, to increase the key as again it said the Japanese economy was just too weak to handle rate increases. 

What the BOJ did do, over time, was lower the key rate to zero or less than zero as a way to get businesses and Japanese households to borrow money and begin to use that money in the economy.

Another idea for businesses to use their huge savings in the economy as the sub-zero interest rate meant they would be losing money each money so it was the plan of the BOJ to get companies to "use their money" or lose their money.

The Bank of Japan is/was the largest buyer of Japanese bonds to try and help the Japanese economy to get out of its current rut but the goal didn't work as the Japanese economy essentially has been stuck in  a rut for some time.

The only thing the buying of Japanese bonds did was to increase the GDP to Debt ratio which put the Japanese government into even more debt. But some would say Japan owns its own debt which is correct but still has a problem that needs to be looked at before it gets too big.

The Bank of Japan has been buying Japanese bonds for who knows how long exactly and they have a log of assets in bonds that they need to get rid of somehow before they begin to affect the Japanese economy.

The BOJ could try to sell the bonds to other countries at a reduced rate but who wants assets at a reduced rate. And or they could try and re-sell them back to the Japanese government again, at a reduced rate to reduce their balance sheet.

The Bank of Japan can't really do anything now to help the Japanese economy unit it can reduce its bloated balance sheet. When it does it has more room to maneuver and then it can help the Japanese economy even more.

Market stability is very important as the one thing the Bank of Japan doesn't want to do is cause harm in the market so they are very concerned with what they do and how it might affect the financial markets in Japan and globally too.

Have a nice day! 

Japan Inflation: Updated March 26, 2025.

 

Japan inflation slows to 3.0% in February on utility bill subsidies

Article source:  https://mainichi.jp/english/articles/20250321/p2g/00m/0bu/003000c

Ideas:

Inflation has been a major challenge for Japanese households since the pandemic, while inflation seems to have decreased in the US, it hasn't decreased much in Japan, while the pace of increase may subside some its still very high for most consumers in Japan.

And yes inflation is still above the Bank of Japan's stability target and has been for a long time. Most central banks want to see an inflation rate of no more than 2 percent as they feel its a manageable rate for the economy. Too low and central banks feel the economy is not moving fast enough and too high they feel an economy is moving too fast.

It was good and needed that the Japanese government reinstated the utility bill subsidies as many Japanese households were seeing their disposable income decreased due to high energy bills.

Price increases of 2.5 percent might not seem like that much for most Japanese families but for many middle and low-income families, those on fixed incomes it could be a major challenge for them.

While the need for the subsidies was needed and important, it might also increase the government debt as the Japanese government now needs to compensate the energy and electricity companies due to the subsidies.

Its very important for the Japanese government to help all in Japanese society but at the same time, its important the Japanese government to find ways to reduce the high government debt, which is the highest among advanced economies.

While energy prices have begun to decrease they are probably too high for the average Japanese household and for sure those on fixed incomes in Japan.

And again, as stated in other article blogs maybe Japan needs some energy free trade agreements that can help to stabilize energy prices as Japan, as a resource-poor country has to import much of what is needs and doesn't produce any oil or gas in Japan, other than maybe some refinement.

Its seems the energy, gas, and oil situation is always going to a challenge for Japan and maybe, while, controversial, its time to re-consider nuclear fuel as a way to keep costs down, which Japan had for a very long time before the 3/11 earthquake and tsunami in the Tohoku region on Japan. 

Inflation has been a challenge since the pandemic in Japan, and Japanese consumers have probably been reducing their spending on most things except the most essential items.

Consumer spending is the weakest link in regard to GDP in Japan as the Japanese public just doesn't spend as much as the US and probably the same with the EU.  It is suggested that maybe 50 percent of Japan's GDP is consumer spending but it doesn't seem that way, as the BOJ and other Japanese agencies always talk about consumer spending in Japan is not where it should be.

Food prices increasing 5.6 percent is a significant increase and it could be affecting many in Japan such as average Japanese households, low-income households, and fixed income households who spend a larger part of the disposable income on food than the other groups.

The rice supply situation has been written about in other blog articles so not much to say about rice supplies here.

Surging food prices will have an significant affect on all parts of the Japanese economy such shoppers going to supermarkets, maybe shoppers stopping by a convenience store for some snacks before going to work or for lunch, and of course going to lunch, and then going to dinner in the evening and or many people might skip going to dinner as prices might be too high and or they have less disposable income to spend on dinners at night.

And then there is the low-income groups and fixed income groups who are going to be hit even harder and they have even less disposable income to use on many of the these and maybe even at supermarkets they are not going to buy their usual items and try to find substitutes that cost less but just as good, as that's what they hope, and of course going out to dinner is now too expensive for most in these two groups.

The Bank of Japan knows it has to look at all things such as any side-affects to a rate increase and maybe the BOJ felt that the side affects of an increased rate might be too much for Japanese society at this time.

Inflation, at this time, is above the Bank of Japan target of 2 percent and if and when it begins to decrease the BOJ might then feel its time for a key rate increase. But if inflation reminds near 3.0 percent and doesn't move toward the 2.0 percent target they might wait until it does.

The other variable that that BOJ is watching very carefully is wage increases at Japanese companies. If Japanese companies increase wage to a level that the Bank of Japan is pleased that might be good enough for them to increase the rate.

The challenge is most of the Japanese workforce doesn't work for the large name-brand Japanese companies but up to 70 percent of the workforce works for small and midsize companies which most likely can't afford to give the same wage increase as the large companies do.

And then there is the continued challenge of consumer spending in Japan, which is the weak link in Japan's GDP. Weak consumer spending has always been a challenge in Japan as Japanese consumers, for the most part, are savers and not spenders like US consumers.

Its quite possible the Bank of Japan, the Japanese government, and of course Japanese businesses, would hope that Japanese consumers would be a little like consumers in the US who like to spend.

Its possible Japanese shoppers are buying air conditioners early, in February in anticipation of a hot summer and prices for air conditioners in the winter might be lower than during the summer when demand for AC's is much higher.

Service companies, most likely are passing-on their increased costs to the  next in the supply chain and most likely as they increase wages too, they too are passing-on those costs the the final consumer in the supply chain.

Service companies in Japan often employ a lot of contract workers, part-time workers, and maybe mostly female workers and these groups need and want wage increases too as they know there is a labor shortage in Japan and they can now easily find a new or better job with higher wages and so service companies might understand and will increase wages in April when wages will increase again, as the want to keep their workers with higher wage increases and or attract new employees with higher wages.

Have a nice day!

Japan Long-term Interest Rates: Updated March 31, 2025.

Japan long-term interest rates surge amid BOJ tightening speculation

Article Source: https://mainichi.jp/english/articles/20250317/p2g/00m/0na/019000c

Ideas:

Long term rates are heavily influenced by inflation as inflation is still a challenge in Japan lenders will keep rates high to protect their assets.

With the US and its tariff situation affecting many countries globally, the Bank of Japan might just hold off on increasing rates until they see how the situation is going to affect the Japanese economy, if at all.

Bu if the Bank of Japan does increase the rate, that might mean more bad news for Japanese consumers who will now have to deal with increased rates on their credit cares, home loan rates and buying a new care on loan.

A lot has happened since late January since might have changes the Bank of Japan's mind, as again, the turmoil in the US and what they are going to do with tariffs has many countries worried including Canada, Mexico, and most of Europe.

Since all economies these days are highly interconnected its not likely that Japan can just sit on the sidelines and expect that they won't be affected by all the turmoil. 

Supplies lines supply chains, potentially could be greatly affected as for example cars are made over and through many different countries again could affect all of the layers related to supply chains.

Yes, the Japanese economy is very stabile and resilient, but again, all economies are jus too interconnected and what is going to happen in Canada could still affect Japan, and what happens in Mexico too could still affect Japan, and what happens in the EU and all the supply chains could affect Japan too.

It could be too early to say what the Bank of Japan is going too do and Banks are worried about their assets so they increase rates ahead of time anyway just to be safe.

Sometimes banks are like the stock market, worried about everything that could affect their profits and money, so they always increase rates to make sure all is OK for them.

Yes, the Bank of Japan trying to normalize policy meaning they are trying align themselves with other central banks globally, as for many years they were out of step with no increasing the key rate when the EU and the US increased its rate many times to try and reduce inflation.

It seems many are weary in Japan after years of consistent increased inflation and they don't even want to venture into the bond market situation and they are not using their money to even get Japanese government loans.

Supply and demand even affects the bond market as an increased supply of bonds into the market might have decreased the price of bonds and buyers are just not interested in them at at this time.

What could be affecting the increased mortgage rates also is the wage situation in Japan, as Banks are seeing workers are going to get increased wages potentially could mean the buying of new homes, and the loan market is like any other market, as some lender see rates going up around them they will increase their rates too.

And yes, as the Bank of Japan looks at what is going on with long-term interest rates, the BOJ might think the Japanese economy is not going to handle long-term interest rates too well and might not increase its key rate due the fact the Japanese economy could be less than good.

Finally, the Bank of Japan is watching what is going on in the US and what other countries are going to do.

And again, global supply chains are just too interconnected these days to not affect many countries many economies and even Japan with cars could be greatly affected in the coming months or throughout 2025.

Have a nice day!

Japan Core CPI: Updated Feb. 5, 2025.

Japan's core CPI up 3.0% in Dec. after end of gov't energy subsidies

Article Source: https://mainichi.jp/english/articles/20250124/p2g/00m/0bu/004000c

Ideas:

Japan has been experiencing increases in its core consumer prices since the pandemic period and it doesn't seem to be decreasing much yet.

The Bank of Japan is hoping inflation will be 2.0 percent or less and at the same time it hopes consumer demand and consumer spending will be the main reason for inflation an not companies passing-on their increased costs to the next in the supply chain.

Government subsidies to combat inflation is good and needed but the Japanese government can't do everything as its debt is among the highest among OECD countries.

Most advanced countries use interest rates as a way to control or limit inflation but the Bank of Japan has only recently started using the rate again, after many year of not increasing the rate.

While 2.4 percent might not be much but for some income groups it can be a lot and they begin to look for substitutes if at all possible.

An increase in the key rate increase to 0.5 percent doesn't seem like much but it might be enough to slow inflation as maybe some businesses or households will not go to the bank to get loans as the rate interest rate might discourage them.

The CPI increase was driven by cost-push factors which means companies were passing-on their increased costs to the next in the supply chain including the final retail consumer.

Currently it appears the trend is going to continue but by how much, as it could decrease or it could increase depending on the weak Japanese yen, which increases import prices in Japan.

The Bank of Japan is looking for Japanese companies to increase wages again this year and if the wage increases are to the liking of the Bank of Japan it will most likely increase the key rate again in the future.

The Japanese yen is weak because of the variance between the US key rate and the Japanese key rate and maybe the EU rate too. 

As the Bank of Japan begins to increase its key rate and the US begins to lower its key rate the rates of both countries begin to get closer together which can improve the weak Japan yen to become stronger.

Japan is resource-poor country which means it has to import much of what it needs including its energy needs, which can often fluctuate and Japan is mostly helpless to do anything about global energy prices.

There has been talk that Japan is considering going back to using nuclear energy, which is less expensive but some might say more dangerous especially since the 2011 earthquake and tsunami disaster which caused the shutdown of many reactors in Japan.

Again, as Japan is a resource-poor country which means it has to import much of what it needs including many food products or food supplies such as wheat.

The summer rice shortage is something of a mystery as some blame the poor growing season for the supply shortage and some blame other reasons such as the distribution system for increase in rice prices stating last summer.

Weather can always cause prices to go up or down depending on the situation of a good growing season or a not so good growing season and even global situations related to the weather can affect food price going to Japan.

Many years ago Japanese companies were reluctant to pass-on their increased costs to the next in the supply chain and especially the final retail customer as they were afraid of losing customers.

But times have changed as many companies profit margins are just out of control and inflation related to increased food material costs and energy costs have just become too much for many companies to handle so now they have no choice but to pass-on their increased material and energy costs to the next in the supply chain and yes including the final retail customer.

The increase of durable good might be something that could be related to an increase in the cost of manufacturing the good as again material and energy costs have increased the costs of everything in Japan and globally.

Usually the services sectors has the lowest wages as many services companies might only pay minimum wage or something like that. 

But as there is a labor shortage in Japan now many service companies now have to increase wages as a way to get the best talent possible even if the wages are not the best.

The Bank of Japan is looking very carefully about what Japanese companies are going to do with wage increases as the BOJ is hoping the increases will be enough to help the economy and consumers will begin to spend again to the point that the economy will grow again.

Have a nice day!

Japan Wage talks: Updated Jan. 27, 2025.

 

Japan annual wage talks begin amid high hopes for sustained pay hikes

Article source: https://mainichi.jp/english/articles/20250122/p2g/00m/0bu/029000c

Ideas:

Japan wages, unfortunately, are much less than other OECD countries, so there is a definite need for Japanese companies to increase the wages, despite increasing wages the past two years.

While large Japanese companies will most likely increase wages of 5 percent of more, the challenge is going to be small and midsize companies who probably don't have the profit margins or the resources needed to increase wages.

The Japanese government needs to find a way to help small and midsize companies increase wages, as again, small and midsize companies just don't have the resources to increase the wages.

A wage increase of 6 percent sounds good but will Japanese companies agree to increase wages that much and will there profit margins allow that much increase and most important will stockholders agree to a wage increase of that much if they are publicly traded company.

If large Japanese companies agree to a 6 percent increase can small Japanese companies be able to match what large companies do, when they haven't been able to match large company wages the past two years.

Yes, in a market economy private firms drive economic growth, but sometimes they need a little help or push from the government to get them there, for example small Japanese companies might need a little help.

What the head of Rengo said was correct but unfortunately wage increases in Osaka, Nagoya, and Tokyo might be doable but can small and mid sized companies in the regional economies in Japan be able to match what the large companies in the metro areas do.

If the Bank of Japan does increase the key rate, will it be enough to prevent prices from rising sharply.

The idea is as the key rate increases it will discourage some businesses or households from borrowing and or reduce spending enough to prevent price increases as demand will decrease just enough that keep prices low.

As large companies have increased wages the past two years will they have the appetite to increase wages for a third year. And will they increase wages above the 5.58 rate of last year.

And yes, small firms have not been able to pass-on their higher cost to consumers and probably the main reason might be that many small and midsize firms are suppliers of large companies who might not want to have their supply costs increased which might be a limiting factor for many small companies in Japan.

While large companies might be able to absorb a loss of customers due to price increases, small companies might not be able to absorb the loss of customers.

Have a nice day!

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!

Japan Trade Deficit in August: Updated September 24, 2024.

 

Japan logs 695.3 bil. yen trade deficit in Aug. on weak yen

Article Source:  https://mainichi.jp/english/articles/20240918/p2g/00m/0bu/014000c

Ideas:

Japan likes to think its an exporter oriented country, and record exports show it, but the trade deficit overshadows its exported oriented focus, as the weak yen as continued keep import prices higher than normal.

Not only does the weak yen affect import prices and importers, but the overall domestic economy, as businesses and Japanese households feel and see the increase in prices every month.

Not say anything bad about the Bank of Japan, but they seem to be taking a hands off approach to the weak yen and the inflation situation, and just letting the Japanese economy with inflation run its course.

Japan, for a while, was really not in the game related to semiconductors chips but now it trying to get back into the game and trying to improve its market share as Taiwan and South Korea, have most of the market share in semiconductors.

The shrinking of the trade balance is a good sign that the Japanese economy might be improving moderately, using the term the Bank of Japan likes to use.

But there is no room for optimism, maybe a little, as the Japanese economy has been stagnant for a long time, with a lot of ups and downs, but still despite the ups and downs, a very staple economy, as the ups and downs might be 1 percent up and 1 percent down, but not much beyond that.

There are positives and negatives related to a weak yen, as it helps exporters and overseas profits but increases import prices too.

The weak yen is a boom for foreign tourists traveling to Japan, as they have more buying power or purchasing power, and can buy more things in Japan, which then is good for the Japanese domestic economy, and Japanese hotels and other businesses gain from tourists buying a lot.

So the Bank of Japan needs to balance out what is best for the Japanese economy, with  Japanese exporters and overseas investors seeing the profits increase, but at the same time importers lose out with increased higher import prices, and the overall Japanese economy, losing out with the weak Japanese yen.

The Japanese trade deficit also affects the Japanese current account, which is like a country's bank account, as the trade deficit reduces the amount of the current account. 

But exports and overseas Japanese investors increase the Japanese current account, so the again, the Bank of Japan needs to be careful or find a good balance for all activities related to the Japanese economy.

The global economy always goes through business cycles, like any economy, as right now, it might be in a slight downward cycle but as always it will bounce back and move in the right direction.

Its good that Japan has a trade surplus with the US, but at the same time it needs to keep focusing on other markets and not just the US. But of course, if trade continues to be positive with the US, why not put more resources into trade with the US, especially if trade with China is not where it should be at this time.

And again even though trade with the US was only 1.2 percent that is still a good number considering the volume of trade between the US and Japan.

The US economy might be the strongest in the world at this time, but that doesn't mean Japan should neglect or focus about its other trade partners and especially Japan should continue to trade with China, as its a large economy and eventually it will turn around.

Again, continue to trade/export to China, as China is going through some internal economic challenges at this time, and eventually they will sort things out.

China is just too big an economy to ignore and Japanese companies, as much as possible, should continue to do business in Japan, even if they are losing money, at the present time, as in the future and now, the Chinese middle class it just too large to ignore so they have a lot of money to spend.

That's to say if a Japanese economy is losing market share to Chinese companies and they just can't continue on, then its good to exit the Chinese market.

Asia, including South Korea, is both positive and negative, as Asian economies are a mixed bag at this time time, but, again, Japan should continue do to business with these economies has they have large middle classes with a lot of money to spend.

The EU is a different story as it seems to have it own stagnation challenges and maybe the Ukraine war situation is affecting the EU and or demand for Japanese products its just not there at this time.

Have a nice day!

Japan Current Account for July: Update September 13, 2024.

 

Japan logs record surplus for July on foreign investment returns

Article Source:  https://mainichi.jp/english/articles/20240909/p2g/00m/0bu/012000c

Ideas:

A country's current account is like a bank account, as foreign investments and exports add to the current account, while imports decrease the current account.

Of course there are positives and negatives to the current account, but Japan, like many economies, not all, need the current account to be positive to pay for its high debt to GDP ratio, which is the highest among advanced economies.

The weak yen has helped with the surplus in overseas investments, but the weak yen has its negatives too, as it increases import prices, which reduced the current account.

The Bank of Japan, while worried about the weak yen and import prices has to balance out what is happening, as the current account surplus seems good for Japan, while the weak yen drives up import prices and hurts the domestic economy.

And then there is the idea of foreign tourists and the weak yen, which give them more buying power in Japan to buy more when they travel to Japan.

So the Bank of Japan has to be very careful, and balance out the needs of the domestic economy, the needs of Japanese investors in foreign countries, the needs of Japanese exporters, and the needs of foreign tourists who spend a lot in Japan.

Japan is a resource poor country, and always has to import much of what it needs, and as imports exceeded exports, the current account had a deficit, which for some countries might be a  challenge, and for Japan, it might be challenge as it has a debt to GDP ratio among the highest if not the highest among advanced countries.

Japan, for a sometime, has been behind Taiwan and South Korea in the global semiconductor race, as they are now trying to catch up or at leas get back into to the game.

Communication devices might be Samsung smartphones and or Apply I phones, which both have strong market share in Japan.

It seems like, maybe not so, but Japanese smartphone makers have given up and just aren't making any waves in the global market, for example in the EU or the US.

Japan has a way to go to be a global player in the foreign tourist market, but its making a strong push to get there, but of course its not near France or Spain in the number of foreign tourists just yet.

There is always the ideas about airline ticket prices, as maybe they have come down related to what they were before and just after the pandemic.

While there was surge of 41.9 percent in July, there are some who might think Japan now has too many foreign tourists, but tell that to all of the shops and businesses, and hotels who cater to foreign tourists and their spending money in Japan.

For some things, such as the services trade, Japan will continue to have a deficit as it to pay for digital services related to streaming and online ads. 

Of course some might say Google and Amazon, and YouTube  so on make too much relate to adds and streaming, and maybe even they are out of control, as the prices for add and so just keep going up.

Japan always focuses on the current account while the US might not give it much attention, as they always run a trade deficit as the US is a major import country, and the trade deficit doesn't seem to matter much to them.

Have a nice day!