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!

Japanese Supermarkets and Valentine's Day Chocolate: Updated Feb. 20, 2025

Supermarkets top pick for buying Valentine's Day chocolates in Japan amid price hikes: poll

Article source: https://mainichi.jp/english/articles/20250212/p2a/00m/0bu/013000c

Commentary:

Traditionally in Japan, buying chocolates always happened in Japanese department stores and the departments usually had the best and of course most expensive chocolate offerings.

For example, whenever I visited Sogo department store at Yokohama eki, subway/train station they had many counters near the front related to chocolates and or strawberry cakes and so on.

Only recently because of the continued inflation in Japan, have Japanese consumers gravitated to the supermarkets which of course offer cheaper brands of chocolate gift sets.

But as we see, at 31% for supermarkets and 29% for departments stores there is not a big difference between the two choices as maybe the quality of department chocolates appeals to some and the lower price of supermarket chocolates appeals to others.

And at 15 percent for e-commerce sites online shopping of chocolates like at Amazon or even some chocolate making companies offering online purchases online shopping has not affected the buying of chocolates at the other two offerings, even though online shopping of course has become common place globally now.

There were 900 supposed women in the survey which might seem OK, but it distorts the results unless of course the survey company only wanted to see where women were buying their chocolate gifts for Valentines day.

Of course back in 2022, the pandemic might have still been on peoples minds and didn't want to buy at supermarkets or departments that much but chose e-commerce sites instead.

But even in 2022 it seemed department stores with the highest quality chocolate offering was still the number 1 choice.

But again, supermarkets, with lower costs chocolates and less quality seemed to appeal to some or many in 2023 and 2024.

It seems, even though its known that supermarket chocolate gift offerings are less quality than department stores offerings, it might be because of inflation and higher costs at the department stores that consumers in Japan are willing to sacrifice quality for price these days.

And or, as other articles have suggested the giving of chocolates has lost its luster so consumers in Japan are not buying the most expensive chocolates normally found at Japanese department stores, instead buying the cheaper chocolates at supermarkets.

But again, at 31% and 29 percent between supermarkets and department stores there is not a lot of variance or difference between the two, as may supermarkets might have had an advantage as Japanese consumers, went to supermarkets more than departments stores and it was more convenient to buy the chocolates at the supermarket, while there, instead of making another trip to a department store.

Again, the number of respondents was very low at 46% or less than half of the total of 900, which in itself might not be a big deal, but would have been better if more had responded.

And yes, of course price might have had a affect on where they bought their chocolate gifts, but again also maybe the importance of buying quality chocolates has lost its importance in Japan, so Japanese women instead chose the cheaper option at a supermarket.

Also the fact that women spent less could be related to the increase in price and or placing less emphasis on the important of Valentines Day might have been a reason for less spending.

Have a nice day!

Japan Ramen Shops: Updated January 15, 2025..

 

Record number of Japan ramen eateries went bankrupt in 2024

Article source:  https://mainichi.jp/english/articles/20250111/p2g/00m/0bu/026000c

Ideas:

Ramen has always been considered a non-expensive food and not using the phrase cheap. as globally it is/was eaten my many people such as college students, people on limited budgets, and or course the average salary man in Japan for lunch, as the price usually was not very expensive.

But unfortunately, as utility prices increased and ramen ingredients have increased, ramen shops might have wanted to increase their prices, but whomever, didn't like the idea of ramen prices increasing and maybe the normal customer had no choice but to forgo their favorite lunch meal, and probably headed to the nearest convenience store for something less expensive.

Unfortunately, in a market economy there are going to be those who succeed and those who don't. Again, even though the ramen shops might have wanted to pass-on their increased costs to the retail customers, maybe some or many customers didn't like it and didn't go back.

Perhaps increased ramen prices have become very elastic meaning when the average customer sees a price that they feel is now too high they think twice about it or they don't go there anymore.

The problem or challenge seems to be that even though ramen prices are still relatively low, the average Japanese person's disposable income might be too little to even consider the increased ramen prices.

Its like a multiplier affect that begins to affect all purchases in Japan and not ramen shops and their increased prices.

Yes, maybe many ramen had to do the same thing but maybe the price increase was too much for some or many of the customers and they voted with their feet and didn't go back to the ramen shop, again looking for a substitute and maybe a convenience store.

Unfortunately inflation has not stopped in Japan and raw material and utility prices keep going up and has hurts many businesses in Japan along with stressing out Japanese families.

Ramen maybe should be considered a staple for the Japanese and maybe the Japanese government could temporarily place ramen prices at ramen shops on the price control list, meaning shops can't increase prices beyond as certain prices, and then compensate ramen shops with some kind of subsidy to help them survive.

Even though there are 34 percent running at a loss, it could be much worse, but at the same time, again. in a market economy there are going to be those who are successful and those that aren't.

A few years ago, as I was having a conversation with a venture capitalist in Tokyo, he said his company specialized in helping restaurants and supermarkets that were having financial problems and tried to help them survive.

But probably not all venture capital companies are that considerate and they might want to take them over, sell them or something like that.

Sometimes consumers/customers adapt to the change in prices and don't think much about it. But if their disposable income is already much less than normal they might have an imaginary price line that they think they can't afford even though they might want it or think they need it.

Yes, small and midsize shops with less resources and not a lot of extra funds  might think twice about increasing prices, while the larger firms might have no problem increasing prices and they feel they and withstand the loss of some customers and the price increase along with the customers they retain will still be enough to stay the black.

The smaller firms with less resources might not have a choice and might increase prices anyway hoping that they can still attract enough customers to ride out the current challenges.

Have a nice day!

Japanese Pubs Closing: Updated Dec. 13, 2024.

Japan's Izakayas close at faster pace than during COVID-19 amid inflation

Article Source: https://mainichi.jp/english/articles/20241208/p2g/00m/0bu/020000c

Ideas;

There could be many reasons why the izakaya style operators are going out of business. The same situation is happening in South Korea, as people are just not going out to drink as much as they used to.

And then add in inflation and some consumers might be cutting back on going out as they stay at home more and less going out during the week.

But the same with many different restaurant chains in the US, and consumers change their style of eating out and where they wan to go to, and then of course, in Japan add in the inflation factor.

All of the above variables play a role in pubs, bars, and restaurants closing these days, globally, as its not just a Japan situation but a global situation.

For example, the restaurants that were popular 20 or 30 years ago are not popular today, and most of them have gone out of business.

As consumer behavior changes malls, restaurants, bars, and pubs, are on notice to innovate or go out of business.

While online shopping has nothing to do with izakaya style pubs, its does have a huge affect on malls and other stores where online shopping, along with changing consumer behavior, is forcing many malls to close these days.

And yes, izakaya style pubs need to innovate or be left behind, as consumer behavior never stays the same and is always changing. 

The only constant in business is change and companies need to know what to look for and what to do to change to stay in business.

Its not just about the bottom line but looking for changes in consumer behavior, looking for clues to the changes in consumer behavior that might affect a service companies business.

Some companies might be able to acquire other companies and or merge with other companies but some operators might not be able to do it.

The Watami Co. acquired the Japanese unit of the Subway sandwich chain and plans to expand from 200 to 3,000 outlets. 

They need to be careful that they don't expand too fast and they might over-extend themselves if they aren't careful.

Have a nice day!