Japan Household Spending: Updated May 10, 2025.

Japan FY 2024 household spending down for 2nd year amid rising prices

Article source:  https://mainichi.jp/english/articles/20250509/p2g/00m/0bu/020000c

Ideas:

A real 0.1 percent decrease for fiscal 2024 is not that much but it shows a trend that Japanese consumers are decreasing their spending as inflation continues in Japan.

A decrease of 0.1 percent might be an average so there might some who decreased their spending more and some consumers who didn't decrease their spending at all.

Food prices seem to always be in the news and for good reasons, as food expenses make up about 30 percent of all spending by households globally, not just in Japan.

The 304,178 yen might be an average again, as maybe there are some households that spent less due to the fact that they have less income to spend and they are watching every yen closely.

Yes private consumption or consumer spending might make up half of Japan's gross domestic product or GDP but the challenge has always been in Japan that its not enough as it should be much higher like in the EU or the US where is over 60 percent of GDP.

Consumer spending in Japan has challenges due to the shrinking of the Japanese population as there are less Japanese consumers to spend in the economy to keep it moving. 

So Japan depends a lot these days on foreign tourists to bridge that gap but it not enough, as Japan needs a steady influx of qualified workers that can stay and live in Japan and spend money like Japanese citizens.

Real wages while improving the last two years, haven't kept up with whats going on in Japan for many years, and real income just keeps falling behind, which means Japanese consumers/Japanese households just can't keep up with inflation even some of them might be getting wage increases.

And yes, companies keep passing on labor, raw materials costs, and energy costs to the next in the supply chain including the final retail customer.

Japan is in something kind of bubble that it can't seem to get out of no matter how hard it tries with continued inflation, companies passing on costs, and low wage growth that can't seem to get past the line where the economy can grow again.

Yes, as prices for food product continue to increase Japanese consumers will continue to cut back as much as possible which of course will hurt the Japanese economy, Japanese companies, and the Japanese labor force.

Japan is a resource-poor country which means it has to import much of what it needs and the weak Japanese yen doesn't help as it does push import prices up and makes it more challenging for Japanese consumers to buy what they need or want.

The only good idea about the weak Japanese yen is its good for foreign tourists as they now have more purchasing power and can spend more in Japan.

A weak Japanese yen is good for Japanese export companies too, as they can get more for the products overseas and it increases the Japanese current account too.

The Engel coefficient, while a very old economic idea is still very relevant today, as its a good indicator of the standard of living for a society or country.

Yes, it indicates that maybe the standard of living in Japan has decreased as Japanese households are spending more on food than ever before, but at the same time, 28.3 percent might just be an average as some households might spending more and some might be spending less. 

If we could separate inflation and spending on food it might be a different situation as maybe, as expected, if inflation were lower than there might be less spending on food. 

At the same time if wage increases in Japan were higher for all Japanese workers then spending on food might be even lower, but all of these are just ifs and not reality at the moment.

Japan used to be a somewhat smooth operating economy without all of the scandals and situations now taking place.

But now there are many different situations affecting the economy that was not there before or at least not before the bubble crash of 1989.

Inflation too, might be the reason there is less spending on transportation and communication as Japanese consumers are cutting back on everything they think they don't need.

Just because there was an increase in spending doesn't mean it was related to an increase in consume demand as the article suggests it was most likely related to higher electricity bills and rising admission and tuition fees.

Japanese families, like families everywhere spend on things they think are need and important as maybe tuition for their children to go to private universities is a major priority.

Nominal wages really don't matter and real wages is what is important and nominal wages contain inflation while real wages are wages without inflation.

Real wages indicates how much spending power a worker has and able to spend while nominal wages hide that fact.

Both 4.2 and 4.3 indicate prices are too high in Japan and the average Japanese households will continue to see their disposable income decrease as they have to pay for higher food prices and don't have much left over for other spending in the Japanese economy.

Rice is a major problem and major challenge now as rice prices continue to remain high since the so-called rice shortage of the summer of 2024, even though the Japanese government has been releasing stored-up rice supplies to try and bring rice prices down with almost now affect on prices.

Have a nice day!

Japan's Real Wages: Updated April 10, 2025.

Japan's real wages fall 1.2% in February, down for 2nd straight month

Article source: https://mainichi.jp/english/articles/20250407/p2g/00m/0bu/005000c

Ideas:

Real wages is what matters as it is the amount that households/consumers can use in the economy while nominal wages are wage plus inflation which can be a distorted number or not a true number for households or consumers.

At the same time the 289,562 yen might just be an average amount as there might be some above and some below that amount, as the Japanese economy has a lot of income inequality at this time, which illustrates the difference between the highest incomes and the lowest incomes.

A decrease of 1.2 percent might not seem like that much but if you living from paycheck to paycheck it could be a lot and it you are family of four that could really affect a families disposable income.

It's quite possible or not, that anytime the Japanese government decides to implement subsidies for utility bills, consumer prices increase as whomever is increasing prices due to households having a little more disposable income.

An increase or decrease, however you want to see it, from 4.3 to 4.7 is still a large increase in consumer prices as the 4.3 percent might be too much for many Japanese families, and especially the low-income and fixed income groups.

The Bank of Japan and the Japanese government should not rely too much on wage increases as whatever the large companies offer will not be the same for the small an midsize companies who just don't have the resources needed to match the large company increases.

Up to 70 percent of the Japanese workforce is employed by small and midsize companies which it quite possible, unfortunately, that they won't get the same wage increases as the large company workers, which then means the might be still have to struggle with high prices.

For the large Japanese companies an increase of 5.42 percent is very good as it is close to helping those workers overcome the inflation situation in Japan, but again, the real test is going to be what are the wage increases going to be for the 70 percent small and midsize company workers.

Yes, consumer purchasing power is what is important and will the wage increases improve the purchasing power of all workers in Japan, large company midsize company, and small company workers.

The Bank of Japan might have been thinking about increasing the key rate but with the US administrations on again and off again tariff situation the BOJ just might wait until they know exactly what is going to happen.

Inflation continues to hurt real wages in Japan as workers are probably thinking when is it going to end as ever since the pandemic inflation has been part of the daily life of most Japanese households.

And the real challenge is if real wages continue to decrease in both small and midsize companies then most likely their worker's disposable income is decreasing which means there is or will be less consumer spending in the Japanese economy.

Wage increases while implemented in April of each fiscal year and seen in monthly paychecks might not be enough for all workers as it has to be a concerted effort for all companies if there is going to be a increase in consumer spending which is needed to improve economic growth.

If only 30 percent of workers in Japan get wage increases that are enough and the other 70 percent don't that means there is not going to be enough consumer spending in the Japanese economy to increase economic growth.

And again, depending on what is going to happen in the US, the Bank of Japan is probably going to wait at least three months to see what the US is going to do with with the tariff situation.

Have a nice day!

Japanese Household Spending: Updated April, 6, 2025.

Japan's household spending falls 0.5% on year in February.

Article source: https://mainichi.jp/english/articles/20250404/p2g/00m/0bu/012000c

Ideas:

Japanese consumers, like all consumers globally, don't like surging prices and so they either look for substitutes of equal quality and or begin to cut back on their spending which is whats going on in Japan now.

Some, again, might be looking for quality substitutes but as other articles have suggested there are so many food products with their prices increasing there might not be any good substitutes available that haven't increased in prices too.

Food prices and inflation has been a major challenge since the pandemic and you would have thought that the Japanese government might have tried to find a way to lower prices, as if they, which they have, nothing has really worked so far.

Spending 290,511 might be low or it might be low depending on what you see or look at. For example, as inflation has continued in Japan that 290,511 might include how much prices have gone up which means for example, if inflation had not gone up that 290,511 yen might be much lower.

It's highly unlikely that a Japanese family of 3 or 4 might have spent even more as they might have had to buy more food, more clothes for the children, school expenses and so on. so the 290, 511 might be the lower amount that larger families might have had to spend even more

And then there are the lower-income and fixed income groups that might not have been able to spend that much so their spending might have been significantly much lower, as they probably had to cut back on their spending and even tried to look for more substitutes as a lower price with the idea that they had to sacrifice quality for the get the lower price.

And again, as inflation continues on in Japan that 1.8 percent increase in spending might just be related to an increase in prices and not really an increase in Japanese consumers just buying more to buy more.

But. all things being equal, an economic saying, an increase of 1.8 percent was not really that much of an increase, for example, if you take out inflation and price increases.

Consumer spending or household spending makes up about 50 percent of Japan's GDP, which is much lower than what US consumers spend which is about 60+ percent of the US GDP.

Japanese consumers, for the most part, have been more savers than spenders so maybe the reason they don't spend like US consumers.

Fresh food items are subject to many different variables which can increase or decrease the price of food products, such as weather, the time of year, hot or cold temperatures and so on which can increase the supply or decrease the supply of a food product.

And then add in the idea that most fresh food items are sold at auctions which can be a variable too as suppliers and vendors sometimes can control the auction markets to get a higher prices, which then means the final customer will pay even more for the product, which is probably what has happened with the rice market in Japan these days.

It seems Japan usually has a lot of Japanese people going to the hospitals and clinics as medical care is very cheap in Japan compared to the US, so they go for any reason, because they have to pay that much.

And yes, there might have been less flu cases this winter as maybe the usual flu spike in the winter wasn't as severe as past winters.

Clothing retailers spend a lot of determining what demand for their clothes products are going to be and they plan months not years in advance for each new season. For example for the spring season they might start displaying their spring clothes just after the Xmas season has ended and if there is a long winter, consumers might wait until they actually begin to feel and see spring, so retailers might have new spring clothes sitting on the racks for a few months without much in sales.

In this situation if should be remembered that air conditioners can double as heaters too so it could be a little misleading unless you read carefully.

Yes, the winter cold seemed to last a little longer than usual this year in Japan, which might be related to global warming or maybe not.

So unless the Japanese government implemented more energy subsidies for Japanese households that means less disposable income for households to use in the Japanese economy.

Household spending or consumer spending might be half of Japan's GDP, but its much lower than the US consumer spending at around 60+ for consumer spending.

But you can't compare apples to oranges in this situation, as US consumers and Japanese consumers are different kinds of spenders as Japanese spenders, for the most part, have been savers in the past, which US consumer have been, up until recently, free-wheeling spenders, but times do change and that doesn't mean all Japanese consumers are mostly savers and all US consumers are free-wheeling spenders.

It must be remembered that the 571,993 might just be an average as there might be just as many above that amount and just as many below that amount.

This might be good time to talk about the increase in income equality in Japan which keeps getting bigger every year.

Income inequality is the difference between the highest income earners and the lowest income earners and it seems the rich might be getting richer and those at the bottom might be increasing too.

The Japanese government, so it seems, doesn't seem to be paying much attention to this situation other than trying to get Japanese companies to increase wages for their workers.

But the challenge with that is up to 70 percent of Japanese workers don't work for the big name-brand Japanese companies but small and midsize companies, and the small and midsize companies might not have the resources needed to pay the same wage increases as what the large companies can pay.

So this might factor in the income equality situation in Japan as there are two sets of workers, for the most part, the haves being the large company workers, and then the have nots all the other workers such as small company workers, midsize company workers, contract workers, and part-time workers, which all have wages or salaries much lower than the name-brand large Japanese company workers.

Have a nice day!

Japan Food Price Increases: Update October 10, 2024.

 

Japan to face price hikes on 2,900 food items in Oct., most in 2024

Article Source: https://mainichi.jp/english/articles/20240930/p2g/00m/0bu/017000c

Ideas:

Japan, unfortunately, is a resource poor country and has to import much of what is needs, meaning its subject to global price increases on raw material products and subject to the weak Japanese yen which cause domestic prices to increase a lot.

You would think maybe the Japanese government would find ways, such as trade agreements, to help lower the price of many products going into Japan.

For a long time, many Japanese companies were reluctant to pass-on their increase costs to retail consumers as they were afraid of losing customers. But this is a new era and now many company easily pass-on their costs as they need to maintain their profits margins.

Increased logistic costs have been going up since the pandemic and these is no other real example than looking at airline ticket prices and the extra cost that airlines now charge customers.

Labor costs is very much different a wage increases have increased, due to the Japanese government urging many companies to increase wages and of course companies will pass-on their labor costs to the next in the supply chain including the final retail customer.

Recently, unfortunately, there have been reports of some companies going out of business because they couldn't afford the increased wage increases and or at the same time could find enough labor for their company, as again, they couldn't afford to pay what workers want or need.

Labor costs, most likely are going to continue to increase, which means more companies pass-on their labor costs to whomever in the supply chain, which means more price increases in Japan for the time being.

Maybe if Japanese companies had been increasing wages consistently over the years, there would not be this crisis on price increases now in Japan.

You can't blame the weak Japanese yen for all of Japan's ills as again, if companies had been increasing wages consistently, instead of all deciding around the year 2000 not to increase wages, there would not be the current wage increase crisis and price increases on products.

This is a situation, again, the could have been avoided if Japanese companies would have just increased wages consistently and not tried to avoid wage increases as many Japanese companies tried to do back in 2000, as they were following the leader, which at the time was Toyota which Toyota decided not to increase wages at the time, and the it just continued on on since then, until 2023 when many companies, due to the Japanese governments urging decided to increase wages again.

Have a nice day!

Japan Price Increases: Updated May 5, 2024,

 

Japan faces price hikes on 614 food items in June amid higher costs

Article Source:  https://mainichi.jp/english/articles/20240603/p2g/00m/0bu/001000c

Ideas:
There are many regions globally, that are being affected by extreme weather situations, and because Japan is a resource poor country, Japan is very vulnerable to the weather changes around the world.

And of course the weak Japanese yen, causes import prices to be even more higher than normal, which then cause importers to pass on their price increases to the next in the supply chain, including the final customer.

At one time, Japanese companies were somewhat reluctant to pass on their increased cost t the next in the supply chain, including the final customer. But these days, as inflation continues, and raw material prices continue to increase, and the Japanese yen remains weak, companies have no choice but to pass on their costs to remain in business.

The current prices increases might not seem that much, but you add in the constant prices hikes every month, or every six months for the last few years it does add up.

Other than Argentina, sometimes it seems like Japan is the only country that keeps getting hit with inflation, Of course its not true, but tell that to the average Japanese household.

As inflation continues in Japan, that means consumer or household spending is going to be even less which means the idea of consumer spending being about half of Japan's GDP is not going to reach is maximum potential any time soon.

Price increased might continue as the weak Japanese yen, causes import prices to increase and companies can no longer keep their profits margins safe so they need to pass on their costs to the next in the supply chain including the final customer.

The Bank of Japan, needs to be very careful about how much it intervenes in the currency market, as Japan doesn't want to be seen as a currency manipulator. 

At the same time, the Bank of Japan needs to find a way to reduce the current variance between the US key rate and the Japan key rate to help Japanese importers and import prices.

Also, the Bank of Japan needs to be aware, and I'm sure it is, that a weak Japanese yen, is good for foreign tourism as there are record numbers of foreign tourists coming to Japan and spending a lot.

Pension payments might have gone up and at the same time, according to a recent article, those on pensions were actually spending more than the younger age groups. 

But true, consumer sentiment is not where it should be in Japan recently, and if inflation continues it might remain low.

The 40,000 yen is good, but it might not be enough. Of course everything helps but how long for a Japanese family uses up the 40,000 yen supplement. 

Again, are Japanese households going to use the 40,000 yen or just put it in the bank and not use it. 

So, yes, Japanese households are spending an extra 106,000 yen over the year, and or having to pay an extra 106,000 yen each year and for some households that might be a lot which means they need to cutback on somethings maybe even needed things.

So, what that all means is consumer spending, which again, is maybe 50 percent or more of Japan's GDP is going to decrease even more and not reach it full potential to help the Japanese economy grow and not shrink.

The only good area is foreign tourism, with the weak Japanese yen, record numbers of foreign tourists keep entering Japan and keep spending as the weak yen gives them more purchasing power.

Have a nice day and be safe!

Japanese Consumers and Dark Patterns: Updated Feb. 16, 2024

 

More than 40% of consumers fall prey to 'dark pattern' sites: survey

Article Source: https://mainichi.jp/english/articles/20231211/p2g/00m/0bu/012000c

Ideas:

Its unfortunately, even in Japan, that there are immoral or unethical people trying to take advantage of consumers.

It happens in every country so consumers/people need to be aware of such practices. Especially if you want to buy from a foreign website and maybe they can trick you into using your credit cards.

Yes, limited stock notices seems to be a big one as they often say "only 1 left" or "only a few left" as a way to get you to buy quickly.

Unfortunately, it seems government either don't have the resources needed to monitor the internet and or don't have the correct legislation to combat unethical practices.

Its not like this just happened with the Internet and online shopping, as Home Shopping TV programs, at times, can be just as unethical in how they offer products and or mislead consumers with outrageous claims about the products.

Many years ago, when I was much younger this happened to me with an insurance plan that I didn't really know about but the company, or agent was very unethical in how they presented the product.

It seems memberships plans are the worst scheme and consumers don't know they are signing up for the membership when all they wanted to do was buy a product one time.

And small lettering ads are another major problem, as unfortunately maybe it's not against the law to use small print or lettering for important information.

Unfortunately, many consumers, globally, don't know how to recognize ethical websites and unethical websites, and the same with Home Shopping programs.

And its even worse for the elderly, who are easy victims of schemes because of their maybe lack of expertise using the Internet and or stressed about their financial situation or health.

There needs to be more legislation as a way to combat unethical people who try to cheat consumers out of their money.

And again, its like the big multi-media companies who say they will monitor bullying on their websites but don't do anything, as controversy increases more views and increases ad revenue.

Most likely the "dark patterns" are not going to change as their are always unethical people trying to take advantage of consumers.

Another example, which I experienced in 2020 for a refund for an airline ticket just before the pandemic was starting. I asked for a refund, and only got a small amount from a $300 ticket. While maybe not illegal its sure felt unethical as the company didn't give me a full refund.

Have a nice day and be safe!