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!

Japan Core Consumer Prices Slow: Updated Feb. 26, 2026.

Japan's core consumer prices in Jan. rise 2.0% on year, slowest in 2 yrs

Article source: https://mainichi.jp/english/articles/20260220/p2g/00m/0bu/026000c

Ideas

Japan's core consumer prices have been increasing ever since the pandemic and look like or feel like by consumers that they are never going to decrease or not that much.

By now, most Japanese consumers might have gotten used to the continuous increase in prices and might have possibly cut back on some or many things they usually buy without even thinking about it.

And then there is the more vulnerable groups in society such as the low-income and fixed-income groups which feel even more stressed when core consumer prices increase even a little such as a 2.0 increase.

The consumer price index might have slowed from 2.4 percent to a 2.0 percent but for most consumers, again, its been almost a six year period of stress and continued increases in consumer prices.

This doesn't sit well with the needs of the consumer or the purchasing power of the consumers as their purchasing power in the Japanese economy keeps getting eroded over time.

But, to be fair. at least a little, this could be a global problem or global situation due to increases in stress on global supply chains, weather conditions affecting some products such as coffee, sugar, and chocolate, and the unsteady global energy markets are always in a flux or so it seems.

The rice situation in Japan is a very strange situation and it never should have reached the level that is has with supposed rice shortages, supposed supply chain disruptions and the continued high prices for a basic food staple that never should have happened in the first place.

The Bank of Japan has to decide what is more important for the Japanese economy, the jobs situation with a supposed labor shortage or the inflation situation that the BOJ seemingly can't get a grip on or is just letting inflation run its natural course without any real interventions in the economy, or as little as needed.

And then there is the weak Japanese yen which is both a positive and a negative for the Japanese economy. As a positive the weak yen boosts the prices of Japanese companies that sell their product overseas which means more yen goes into the Japanese current account which funds many of the Japanese government's budgets and programs.

The weak yen is a negative for the domestic Japanese economy, as Japan is a resource-poor country which means it has to import much of what it needs as as result the weak yen increases the prices of many of the imported products, which then the higher import prices get passed on via supply chains and eventually the final retail customer in Japan.

Yes, the BOJ might have increased its key interest rate by around 0.75 percent and it might done so thinking that the rate increase was not going to affect the overall Japanese economy that much and might have felt the Japanese economy was finally a little more stronger and could handle a rate hike with too many side-affects.

But the BOJ, like most central banks globally, is always looking and watching the Japanese economy for any signs of weakness or any signs of it maybe improving as its always contemplating what it should do next with a rate increase or even a rate decrease.

Food prices are always a major concern for most consumers in an economy as a consumer can get away with buying less clothes or at least the latest fashions, but for food a consumer can't go without food and the continuous increase in food prices forces some consumers or many consumers to try and find substitutes and for some maybe even cutting out completely some food items because now their budgets just can't afford them anymore.

And again, its a major travesty related to the rice situation in Japan and it never should have happened as someone in the powers to be in Japan just wasn't aware of what was going on and it snow-balled out of control and to this day rice prices are just to high for many consumers in Japan.

The global energy supplies of gas and oil always seems to be in a flux as prices go up and down constantly which means for some countries and some economies there is never a stable period related to energy supplies or prices.

Yes, the gasoline tax was another unneeded burden on Japanese consumers, and for those with cars, it just reduced their disposable income even more.

The scrapping of the income tax, which of course was used to bring more money into the government, was unneeded as it potentially reduced spending in the economy overtime.

Public high school tuition is free in most advanced nations and it should be free in Japan too as the Japanese government doesn't need the extra money that it or the provincial governments might take in.

Convenience stores in Japan might even be considered a minor separate niche economic driver for the Japanese economy as convience stores have become very popular with foreign tourists all over Japan these days.

Of course I'm not sure about convenience stores in other countries except the US and South Korea, but there is no comparison to the Japanese convenience store and what some think are nothing more than gas stations and a small store that look a convenience store in the US.

As far a South Korea is concerned they have taken notice with how popular convenience stores are in Japan and they are attempting to upgrade their stores and bring them into the 21st century.

If you have ever been to a Japanese convenience store you can almost buy anything or do anything such as banking, post office things, get your Amazon delivery there and so on.

Japanese convenience stores have evolved to the point that you don't need or have to go some of the other places that might take more time and or you just don't have time to go there as your day is usually just too busy, so the local convenience store or one near where you work does that for you.

The seven major Japanese convenience stores are on the cutting edge of knowing what customers in Japan need and want and they know just when to have the needed campaigns or sales to boost sales or get customers into their stores.

And of course they are very aware that foreign tourists in Japan now see convenience stores as go to place to visit and shop and they are making sure their are touristy type products for them besides the usual food and beverage to buy, eat, and drink.

And yes, even convenience stores are prone to the ravages of inflation as maybe some customers have either reduced their spending in convenience stores and of course limited how many times they might visit a convenience store as their disposable income has been significantly reduced by inflation.

A decrease of 0.8 percent in shoppers is really not that much but a drop from 1.21 billion might indicate a trend that convenience stores might need to be aware of as maybe some need to re-evaluate what is going on and maybe even to change some things as needed to keep the same number of customers coming to their store from dropping too much. 

Have a nice day!

BOJ leaves benchmark unchanged: Updated Feb. 4, 2026.

BOJ leaves benchmark interest rate unchanged at policy meeting

Article source: https://mainichi.jp/english/articles/20260123/p2g/00m/0bu/020000c

Ideas

For a long time, the BOJ suggested that the Japanese economy is/was just too weak for any rate increases as it would significantly affect businesses, consumers, households, and even banks in Japan.

While never really mentioned that much the weak Japanese yen has always been seen as a boom for the large Japanese export companies, as the weak yen, improves their profits as at the time significantly improves Japan's current account which the Japanese government uses for many of its programs.

The two percent target rate as been an elusive target for much of the last decade if not longer and it seems while the BOJ might be inching closer to it, its still a target that is not out of reach but at the same time, not achievable just yet.

Most central banks would prefer the inflation rate would be around 2 percent as they feel its at a manageable level and the economy is not overheating and or not stagnating as the flow of money through the economy is a a reasonable pace.

To be fair, over the past decade, or longer, many former Prime Ministers have tried to use stimulus packages to get the economy moving in the right direction but mostly without much success except for maybe in the short-term only.

As the new Prime Minister is a fiscal and monetary dove, it might mean there is going to be more government spending to try and get the economy moving in the right direction and the BOJ's decision not to increase the key rate might have been a result of being influenced by the new Prime Minister not to increase the key rate which potentially could stifle business spending, consumer and household spending.

The Japanese economy is now considered a mature economy which don't grow that much as even at 0.9 percent or even 1.0 percent that would be a significant achievement as the Japanese economy, for many years was in a quasi-stagnant phase with little to no economic growth.

Japanese businesses and investors need to understand that the Japanese economy is not going to grow like China ever again like the US economy ever again as mature economies just don't have the needed resources to grow like emerging economies do and or it takes a significant increase in resources to grow a mature economy like it did when it was a emerging economy.

It sounds like the current language used by the BOJ related to inflation and the global economy,while not really negative, is aimed as not being too pessimistic as it doesn't want to upset the financial markets in Japan or globally too.

And yes, as Japan is a resource-poor country, global prices and the weak Japanese yen is still going to be factor of importers and the domestic economy in Japan in the future despite the BOJ suggesting inflation might get down to 1.9 percent in 2026.

It appears, as usual, the BOJ is still being very cautious and still sees the economy as being too weak to increase the key rate to much as it might affect, again, businesses, consumers, households, and even banks with a too high key rate increase.

There are always to kinds of inflation moving through an economy as its quite possible that might be happening in Japan at the same time. One kind of inflation, which is very common in Japan is inflation related to the increase or prices due to the increase in costs related to energy and raw materials that companies need to conduct business.

The other kind of inflation, which may or may not be that evident the kind of inflation due to increased consumer demand as business will generally increase prices if they see or feel consumers are buying more of their products.

But to be fair, it seems the first kind of inflation, in Japan, recently is what has been happening for a very long time as maybe consumer spending has been less than optimal for the economy.

Again, the BOJ's 2 percent target has been elusive a very long time and there is trying to estimate what is going to happen in 2027 might be too much as a lot can happen in year in an economy as the BOJ's track record related to estimations hasn't been that significant recently.

But then again estimations are not an exact science or an exact statistical measure as there are just too many variables that can change change within a years time.

And yes, for sure, while the new Prime Minister is a fiscal and monetary dove, there might be more stimulus packages that are going to be presented as a way to improve the economy, businesses, and even Japanese households in the future.

The last two sales tax increases in Japan in 2014 from 5 to 8 percent and then in 2019 from 8 to 10 percent were not very popular by Japanese households or consumers as they significantly reduced their spending but of course over time got used the increase in the sales tax.

The increase in the sales tax in 2014 and 2019 were attempts to use the sales tax as a way reduce the already bloated government debt which was among the highest, if not the highest at 250 percent of GDP, among advanced nations, as the sales tax increases have had a minimal effect on the reduction of the government debt in Japan.

And to be sure the weak Japanese yen, while both a positive and negative for the Japanese economy has been maybe more of negative recently as maybe it has affect the domestic economy a more that helping the economy.

Because Japan is resource-poor economy it has to import much of what it needs and the weak Japanese yen, increases the price of import products into Japan, which means importer and wholesalers will and or passing-on the higher prices for import price through the supply chain which of course means even retail customers are seeing significant increase in prices in Japan.

While at the same time, the large name-brand Japanese export companies see significant increases in the price of their products in overseas markets but how much does it really help the domestic economy and the average Japanese household in Japan.

Have a nice day!

Japan Inflation in Dec. Updated Feb. 3, 2026.

Japan inflation rate at 2.4% in Dec. on food costs, above BOJ target

Article source: https://mainichi.jp/english/articles/20260123/p2g/00m/0bu/014000c

Ideas

Inflation in Japan has been higher than normal or what it should almost since the pandemic and doesn't seem to be decreasing anytime soon or most likely will be too high or most consumers in Japan for a while.

And yes, at 2.4 percent its above the BOJ's target of 2 percent, which coincidentally is the tragedy rate that most central banks around the world prefer inflation to be at and they feel its at a manageable rate, which keep an economy moving along correctly.

State subsides, which Japan has been using a lot lately to help Japanese households is both a positive and can be a negative too.

For Japanese households subsidies help with a households disposable income which means they potentially have a little more to either save or to spend in the economy.

While a negative means potentially it could increase the already high Japan government debt which is one of the highest if not the highest among advanced economies.

The new Prime Minister appears to be like a fiscal dove which means in the near future there could be more government spending to help the economy with lower interest rates, more government subsides, and additional budgets to help improve the economy and improve the lives of Japanese households, but of course increasing the already high government debt.

Even with a core-core CPI of 2.9 percent it is most likely higher than what most Japanese households want to see as it strips away or decreases their needed disposable income for spending in other areas of the economy or other areas of spending they need to do for their families and homes.

At the same time, at 2.9 percent that is most likely way too high for lower-income families and significantly too high for fixed income families as even a slight increase in inflation can have a major impact on the fixed income families in Japan, as they might have to go without some food or needed supplies for their home situation.

Once again an increase of 6.7 percent is way to high for most Japanese households as it cuts into their already limited disposable income and which means potentially less spending in the the Japanese economy which is sorely needed to help get the economy moving again.

And then there is the weak Japanese yen, which can be both a positive and a negative for the Japanese economy. For domestic economy overall, a weak yen increases the price of imports to Japan, which means importers or wholesalers in the supply chain can and will pass-on the import price increases to the next in the supply chain which eventually will include the final retail consumer in Japan.

As far as being a positive the weak yen increases the profits of Japanese export companies which sell their products in overseas markets which contributes to the Japan current account which like a country's bank account which potentially has the ability to maybe reduce higher than normal Japanese government debt.

The increase in rice prices all started back in the summer of 2024 with a supposed rice shortage and with the news of a possible potential earthquake, which saw Japanese consumer rushing to the the supermarkets to buy up as much rice as they could and or horde as much as they could due to the new of a potential earthquake.

And then there was and is the supposedly continued rice shortage which Japan has not been able to control or has been unable to control the increase in rice prices since the summer of 2024, as all of the strategies the Japan government has tried to get rice prices down has not really worked.

Japan is a resource-poor economy which means it has to import much of what it needs including its energy supply needs. What is still not clear on why haven't the supposed trade agreements it has with oil producing countries and Japan still has to pay for higher oil prices on their energy imports.

Again, government subsidies are sometimes good and of course needed to help but again they can increase debt that a government has but Japan has been using subsidies for so long that maybe they no longer think much about it as it just a normal situation now in Japan.

Maybe the Japanese government keeps trying many strategies to get prices down and at the same time trying to get Japanese consumers to spend more in the economy, but while intentions are good they don't don't seem to be working that much at the present time.

Yes, an increase in the key BOJ rate had the potential to reduce inflation but can it be sustained over the long term or is inflation going to inch back up in the future, as inflation has continually been like sticky prices meaning its stubborn and doesn't want to go down that much or that fast in Japan.

The BOJ target inflation rate of 2 percent has been a target of goal for a very long time but it hasn't been reached or able to be reached as whatever the Japanese government or the BOJ tries to use to get inflation down just hasn't worked.

But to be fair to the BOJ, they really haven't tried to increase the key rate that much as the BOJ as consistently suggested that the Japanese economy overall has just been too weak to handle any sustained rate increases and there are just potentially too many side affects related to a rate increase in Japan.

Wage growth or wage increases seem to be a strategies that the BOJ is counting on to help the the Japanese economy a to grow again and get out of its current stagnation phase but the wage increases which really started again April of 2024 really hasn't had that much of an affect yet.

The reason why the wage increases might not have had that much of an affect is up to 70 percent of the workforce in Japan doesn't work for the large name-brand companies which give the best wage increases while the small and mid-size companies where most Japanese workers are don't give as good a wage increase which means they still feel the affects of inflation and still don't want or can't spend in the Japanese economy as much as the BOJ would like them to spend.

Core consumer prices might have increased 3.1 percent annually which they might have a cumulative affect meaning the previous years increases of consumer prices have compounded over time which makes the 3.1 percent increase feel even more as fours of prices increases for the average Japanese family can be significantly and can greatly reduce their disposable income needed to spend on other things in the economy.

And then again there is the lower-income group and the fixed income group which the compounding of the core consumer prices which even expensive to the point they might have to find substitutes for food or other items they normally buy as they are just too expensive, or unfortunately have to go without.

And again, there is the rice situation in Japan, which never should have happened as rice is a major staple for most if not all Japanese households. Some can blame the weather, some can blame government strategies to reduce prices but whatever has been tried just hasn't worked to bring prices down.

There should have been maybe the use of prices controls, maybe on a temporary basis to control the price of rice for the good of society or at least price controls in supermarkets as needed as again rice is a major staple like milk, bread, and eggs are in western economies and maybe shouldn't be left the the whims of the markets to determine the prices as Japanese society depends on or needs a normal price structure that is not out of their control related to their daily lives.

Have a nice day!

Japan CPI In August: Updated Sept. 22, 2025.

Japan's CPI in August rises 2.7% on high food prices

Article source: https://mainichi.jp/english/articles/20250919/p2g/00m/0bu/007000c

Ideas

The pace of increase might have slowed but for sure food prices are still too high in Japan for many Japanese families and especially the lower-income groups.

Maybe for most middle-class families the price of food is too high too but for the upper-middle class they might not notice the high food prices too much depending on the what they buy.

And definitely the fixed-income groups living from month to month on their pensions food prices are just too high at they have to use even more of the total income to buy for food.

The Japanese government needs to find a way to keep energy prices to a reasonable level and or find a way to get some energy trade agreements that can ensure normal prices for coal, gas, and oil as Japan, unfortunately, is a resource-poor county and has to import much of what it needs.

Subsidies are both a positive and a negative as someone gains from the subsidies and someone has to pay for the subsidies.

The average Japanese family of course gains from the subsidies by paying less but again, either the importers, the wholesalers might not get the benefit of the subsidies and usually the government might pay for the difference between the actual cost of the energy and what the subsidy offers which means the government debt could increase even more.

Core CPI is probably still too high for most Japanese families even though it has decelerated in recent months. It should be remembered that its possible that it has decelerated by government of intervention with subsidies and not because of normal market activity.

Again, government subsidies might be needed help, but they can't be relied to fix everything in a economy where prices might be too high or out of control, as too much government intervention in a market economy disrupts the normal flow of economic activities.

Japan has had continued inflation its seems since the pandemic and it hasn't subsided that month except for maybe in the past few months, but at the same time its probably still too high for most Japanese consumers.

Prices for food, excluding fresh items, might be most processed foods might have to be imported which means they are subject to a weak Japanese yen, which means the price of processed food might be too high.

And then there is the global challenge of chocolate and coffee beans which are seeing prices globally at or near all time highs in most economies.

Rice is a major staple for the average Japanese diet and its strange that rice prices became almost out of control for a year and whomever were unable to control the price of rice in the local supermarkets and stores.

You would think, with rice being such an import food product in Japan that again, whomever, would keep it under control with the supply always be enough to not cause shortages in stores or supermarkets.

Eggs are a product that is always subject to either the weather and or animal diseases and challenges which can affect supply and demand of the product.

There are some food products, if possible for the good of society, that should not be subject to the challenges of supply and demand and if possible, the prices should be kept steady with both government and the market finding ways to keep foods such as eggs, milk, bread, rice, and some meat at levels that all families can afford.

Service companies usually have very thin profit margins which means they have very little room related to increases in material costs, energy costs, and especially wage increases.

And most likely service type companies are the first to increase prices and or pass-on their cost to the next in the supply chain which usually means the final retail customer.

Government subsides are good and might be needed in cases where the market is unable to control the price of some products or commodities such energy prices to due external factors.

But they should be used sparingly, if possible, as not to disrupt the normal flow of a market economy as subsidies can distort what is actually happening in an economy over the long term if used too long.

Most central banks, including the Bank of Japan prefer to keep inflation around 2 percent as most feel 2 percent is where the economy is moving at a good rate of flow and if inflation is too low it might indicate there is not enough economic activity in an economy and if its too fast it might mean an economy is moving too fast as might be considered and over-heating economy.

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 Core Consumer Prices: Updated March 5, 2025.

Japan core consumer prices in Jan. rise 3.2% on year on rice, energy

Article Source: https://mainichi.jp/english/articles/20250221/p2g/00m/0bu/009000c

Commentary:
Japan might be in a sticky inflation situation now where prices are not going down but are staying persistently high as the first few paragraphs of the article show.

The rice situation has been particularly troubling in Japan as rice is very important staple for Japanese households and especially for young families with small children.

The energy situation might be related to the fact that Japan doesn't produce any oil or gas and has to import much if not all that it needs. Of course the weak Japanese yen doesn't help as it increases import prices in Japan.

Price increases of 3.2 percent doesn't really sound like much most likely its an average and maybe some prices of products in Japan increased more than that.

The 2 percent target is a common number that many central banks want to achieve as they feel its a manageable number and at the same shows an economy is moving and no stagnating.

And yes, the inflation rate might be large enough that to give the Bank of Japan motivation to increase the rate in the future, but at the same time, the BOJ needs to look at all the data and factors related to the economy and decide that there are not excessive side affects, that could hurt the economy after a rate hike.

A rate hike of the key interest rate is supposed to help a central bank reduce inflation by causing business from not borrowing and from consumers from not using their credit cards for purchases which can reduce spending in an economy overall.

Again, as increase of 3.5 percent doesn't seem that much, but again, it might be an average as some prices might have increased more than 3.5 percent and some might have not increased that much.

The Bank of Japan is a very conservative organization and is not going to increase the key rate unless all the data and observations add up what to the BOJ's expects.

Ever since the pandemic Japan has had persistent inflation that doesn't seem to go away, but at the same time Japan's inflation has not reached the level of inflation of the EU or the US when inflation was at its highest.

But just because inflation in Japan has not reached the levels of the US or the EU, that doesn't mean Japanese households have not suffered through continuous high prices. Japan for a long time had a period of deflation, when prices appeared to be low, but maybe those days are long gone.

Again, Japan for a very long time was in a deflation situation and prices were reasonable in Japan, but ever since the pandemic the situation has completely changed and now prices seem to be very high for many Japanese households these days.

It seems the rice market in Japan has experienced a period of market failure where the normal market principles of supply and demand don't seem to apply now.

There should never have been a rice shortage in Japan, as the Japanese government was supposed to have maintained a reserve of rice to prevent such situations, but even though the Japanese government released the rice reserves to increase the supply the price of rice has not decreased but in fact has increased.

Part of the problem might be that the Japanese government has also increased the supply of foreign rice into the Japanese market, but for many cases there is a high tariff or sales tax on foreign rice which many or all supermarkets and restaurants in Japan have passed-on the tariff or sales tax to the final customer which means the price of rice as remained high in Japan.

Japan is a resource-poor country which means it has to import much of what is needs and it doesn't produce much gas or oil and is subject to global oil prices along with the Japanese yen being very weak which also increases the price of products going to Japan.

Japanese government subsidies were needed and good for Japanese households but a government can't do everything especially in Japan where it has the highest debt to GDP ratio among advanced nations, and the subsidies only increase the government debt.

The increase in household durable goods might be nothing more than supply and demand as the increase in demand for air conditioners might have increased the price like all products when demand increases.

Yes, as companies increase wages for its workers a company will pass-on those costs to the next in the supply chain, and in this case most likely the final retail customer.

At the same time part of the situation might be many service companies might be increasing prices as they try to make for all the losses they had during the pandemic and at the same time, as foreign tourists have significantly increased, just normal supply and demand would indicate a significant increase in demand is going to bring higher prices at restaurants, hotels, supermarkets, convenience stores and many of the tourist places in Japan such the Kyoto area.

Have a nice day!