Japan Core CPI:

 https://mainichi.jp/english/articles/20210720/p2g/00m/0bu/018000c

Article:

TOKYO (Kyodo) -- Japan's core consumer prices rose 0.2 percent in June from a year earlier as higher energy prices more than offset the impact of falling mobile phone fees, government data showed Tuesday.

Nationwide core consumer prices, excluding volatile fresh food items, gained for the second straight month following a 0.1 percent rise in May, according to the Ministry of Internal Affairs and Communications.

The core CPI, a gauge of inflation, is still far from the Bank of Japan's 2 percent inflation target, but prices gaining, albeit only slightly, will be a relief to policymakers.

Ideas:

Its interesting to keep track of prices and core consumer prices, but it looks like Japan is not experiencing any kind of real inflation at the moment. An increase of 0.2 percent is really not a major problem for consumers.

However, it might be challenge for the Bank of Japan, as it goal has been the past seven years to reach a 2.0 percent inflation rate. The 2.0 inflation rate is not just some arbitrary number it represents a sold level of demand and economic activity in an economy.

And as can be seen, prices related to many different areas or prices can be going up and down at the same time. While the global energy markets and oil supplied to Japan might be rising the government plan to lower mobile phone rates seems to be working. 

So prices in a market economy are never linear meaning all going up or all going down at the same time. Even with an increase in overall consumer demand prices are never all up or all down.

Article:

Major gainers were in the energy segment, with kerosene prices surging 21.4 percent and gasoline jumping 17.9 percent. Overall petroleum products gained 14.8 percent.

Mobile communication fees plunged 27.9 percent from a year earlier, as major operators began to offer cheaper plans for data usage in the face of mounting government pressure.

"The increase in energy prices reflecting higher crude oil prices is a major factor (behind the rise in the core CPI)," a ministry official said.

Ideas:

An increase in he energy markets can be both a positive and a negative. For the energy suppliers it might be a positive and now they can sell their supplies at a higher prices to those who need the commodities. And the thing with commodities and are not very elastic, at least to a point, meaning energy products are needed by whomever on a daily basis and even with higher prices consumers of those products will keep buying them.

But of course with families or home consumers, if the prices does get too high and or if its in the middle of a hot summer, they might cut back some on their use of their AC.

And the the operators and mobile communication fees, is it a case that maybe they could have lowered their fees at anytime have only decide to do it as maybe the Japanese government put pressure on them.

Or for example whomever the market leader was, such as Docomo always kept their prices a little high so the followers in the market did the same thing.

But now that they are lowering their prices, lets say their profit margins are now less, so they increase the prices in some other products or services to maintain their profit margins.

Article:

"It's hard to say how prices will move but we will have to closely monitor the crude oil supply situation and how it will affect prices," the official said.

The Organization of the Petroleum Exporting Countries and nonmember countries have agreed to phase out production cuts as crude oil prices have been surging.

Japan's inflation situation is in stark contrast with the United States and some European nations, where inflationary pressures are increasing in line with the reopening of their economies following COVID-19 vaccinations.

Ideas:

Usually in normal supply and demand an increase in supply or a surplus can put pressure on prices in the market as suppliers have too much supply compared to the amount of demand for that market.

But that is not always the case, as the global market may not act in the normal supply and demand scenario. As suppliers in countries might just order what they need and nothing more and or they might operate on auction system as they will barter for the best prices or even quantity they can get.

And again if oil prices were surging, in normal supply demand, above, the level of production might have been reduced, which means a possible shortage, which put pressure on suppliers to raise their prices.

Japan's economy, for whatever reason, doesn't seem to always follow the same path as the US and the EU such as inflation increasing in those countries but not in Japan.

Of course Japan has been a little behind in the vaccination situation so most likely consumer demand in Japan is not at its maximum yet, if it ever is.

Japan's inflation level, which is related to consumer demand, business demand, and increasing supplier prices hasn't reached the 1.0 percent level in many years. There could be many reasons for this as the Bank of Japan continues to tries different strategies to increase demand.

One of Abe's ideas when his idea to stimulate the economy, when he was Prime Minister was to get companies to increase the salaries of their employees so that employees would better about their salaries and then begin to spend more of it in the economy, which in turn increases overall consumer demand in the Japanese economy which in turn then might increase the overall inflation rate in the economy.

And the Bank of Japan as a further way to help the economy and to force companies to use their large deposits just sitting in banks further reduced the rates related to banks and companies as an incentive to "use your money or lose your money" over time, meaning increase the salaries of your employees.

So the negative interest rate focused on trying to get companies to use their deposits in banks and at the same allowed those who needed it to get some "easy money" and use it the economy to stimulate economic growth.

Article:

For the current business year through next March, the BOJ expects the core CPI to rise 0.6 percent from a year earlier.

"We can't find domestic factors driving the CPI higher, it's all external ones," said Toru Suehiro, a senior economist at Daiwa Securities Co.

So-called core-core consumer prices, excluding fresh food and energy items, decreased 0.2 percent in June from a year earlier for the third straight month of fall, the ministry data showed.

Ideas:

Even an increase of 0.6 is better than nothing, but until the pandemic ends CPI might not increase any more than that. Unless the economy can really open up, the demand is not going to be there.

And companies, whose supplier prices which might be rising are not going to "pass on" the increase of their costs just yet, which helps inflation, because overall demand in the economy is no where it should be yet.

So what are the external factors? Most likely the global energy or oil market as prices begin to increase and also maybe import prices increasing from global markets overseas.

Another area might be the purchasing of foreign cars might the upper middle upper groups in Japan who might be using their money to buy expensive foreign cars because they can't use it taking trips overseas at this time.

At this time, for many consumers, still, they are only buying the essential items and not buying anything more. 

But that doesn't mean everyone in the Japanese economy is only buying the daily basics. If that were to happen the economy would be in real trouble. 

Article:

Governor Haruhiko Kuroda said last week that the bank will closely monitor the impact of rising raw material costs, which vary among sectors.

"Exporters can absorb rising costs but firms relying on domestic demand, which are still struggling amid the pandemic, may not be able to," Suehiro said. "Coupled with the impact of the weak yen, the impact on the economy as a whole will be negative."

Ideas:

Yes rising supply costs might be a major challenge for many companies in Japan. Because overall demand is not where it should be yet, companies are unable to pass their supply costs on and as such their profit margins are not where they want them to be.

Normally a weak yen favors the exporters as they an get more for their exports in countries overseas.

A strong yen favors the importers and they can buy overseas products at a lower price.

So if Japanese companies needs raw materials from overseas and if the yen is weak compared to the country that they need to imports from, that increases their supply costs. and unfortunately they are unable to pass those costs onto whomever is next in the supply chain.

Have a day and be safe!

Japan Restaurant Challenges: Updated July 7, 2021.

 https://the-japan-news.com/news/article/0007581098

Ideas:

Its a very sad situation that the Japanese government can't or won't increase the subsidies as needed to help struggling restaurants. 

But maybe the feeling its not their job to help everyone in a market economy as there are always "winners and losers" in a market economy.

And of this writing, a little later than the publication of the original article, it is now estimated that upwards of 40 percent of restaurants in the Tokyo area are not following the government's suggestions to close and or not serve alcohol after 8 PM, as the article suggests restaurant owners can't survive if they follow the government suggestions.

As per the previous article that estimated upwards of 40 percent of places are now not following the suggestions of the Japanese government to close early and or not serving alcohol, there could now be even more, especially if there are no penalties for staying open later than suggested.

And as more restaurant owners begin to see other restaurants are staying open, how many more are going to do the same thing.

But another problem is even if they do begin to stay open and not follow the suggestions of the Japanese government, are there or will there be enough customers for all of the restaurants that stay open past 8 PM.

And then there is also the idea of pandemic fatigue meaning people/consumers/customers are just tired of waiting and they will begin as maybe they have already done begin to just go back to their normal or favorite restaurants or Izakaya pubs.

Its unfortunate that these companies have to close some of the places. But even in a normal market economy, without the pandemic companies are always opening and closing places based on profitability.

But the problem of course is the workers at the places that have closed. Did the companies transfer the workers to the more profitable restaurants or did they just lay them off. 

Or did they give the workers a chance to decide. Do you want to transfer to a different location or do you a lay off package etc.

And it has been reported like during the spring of 2020 some companies were actually allowing their workers and or actually lending them out to other companies to work instead of just laying them off. 

Its interesting that only Saizeriya used the strategy, in order to increase sales, increased the number of restaurants to increase sales. The idea is, if they can control their fixed expenses and even their variable expenses, which salaries are part of, the more restaurants the more potential customers the more potential sales for the company.

Again is unfortunate that the Japanese government subsidies are not enough to help as many restaurants as needed.

Now is not the time for "let the market conditions decide" the winners and losers in the market.

These are not normal market times and the Japanese government and the Bank of Japan should do as much as needed to help as many restaurants survive as possible.

I talked to several individuals who work for investment companies in Japan and they are working the best they can to help Japanese restaurants survive.

Yes, the Olympic situation was not good as probably in the past, many customers would go to restaurants, with their big wide screen TV's on and eat dinner or drink and watch some sporting events, for example which is probably what happened in the fall of 2019 during the Rugby World Cup.

As I was visiting Yokohama in both September and October of 2019, it was a different world than now. People were out and about everywhere. And there was electricity in the air that fall during the Rugby World Cup. 

But  because of the pandemic, I doubt despite the Olympics being on TV, as I watched ?NHK and other channels on my computer, that many people actually went to any restaurants or their favorite drinking places to watch the Olympics.

And yes, its always about people. But again, if possible, are these restaurant companies able to transfer some or all of the workers to other places.

And most importantly can these people find similar or other jobs during the pandemic.

As of this writing, again which a little later than the original article on Mainichi, to be fair and honest and not to criticize the Japanese government's attempts to reduce the virus situation, the restrictions in place don't seem to be working.

And at the same time, in a neighboring country near Japan, despite similar restrictions they also don't seem to be working.

So if the restrictions supposedly are not working at new virus strains appear more and more, are restaurants for example, again as mentioned, in order to survive just going to try and stay open, especially if there are no financial penalties to stay open.

Some might say like the article mentioned the subsidies are not enough and we have no choice but to stay open in order to survive.

More and more Japanese restaurants should innovate and provide either take out service and or some kind of delivery service.

For example some restaurants are probably now using Ube Eats and or maybe a cheaper service instead of having their own scooters or drives for the take out service.

Here in the neighboring country I'm in the delivery service since the pandemic as sky-rocketed with more and more restaurants using different food or general delivery companies.

And the number of consumers who now order food online has also sky-rocketed in the past year. 

Yes, any company that was able to innovate and add some kind of delivery services or for those without take out service and now able to do it have a better chance to survive and or grow.

The regular restaurants, and or the family type restaurants, such as Royal Host, Denny, etc. need to have some kind of take out or delivery service if they haven't yet.

And can the Izakaya type places find a way to innovate with some kind of take out menu including an incentive like one free drink for take out of meal and or home delivery type services. 

But unfortunately there virus situation keeps getting worse so hopefully more restaurants can survive offering more take out menus and or incentives to customers to order online and come to the restaurant as needed. And or by using some kind of delivery type service. If Uber Eats is too expensive for the restaurant and customers, they can/should find a reliable service that is cheaper.

If a restaurant large or small doesn't have an online presence they might be losing some customers and or sales because of it.

Have a nice day and be safe!

Bank Of Japan Meeting:

 https://mainichi.jp/english/articles/20210716/p2g/00m/0bu/036000c

Article:

TOKYO (Kyodo) -- The Bank of Japan said Friday it will offer zero-interest funds to help financial institutions with their own push to address climate change that could threaten economic growth and financial stability, joining other central banks increasingly committed to the global challenge.

The outline of the new funding program to be launched later this year was unveiled after a two-day policy meeting at which the BOJ, as widely expected, maintained its ultraeasy monetary policy to buttress a fragile economic recovery. It slightly trimmed its growth outlook for the Japanese economy to 3.8 percent from a 4.0 percent increase projected earlier.

The Japanese central bank stuck to its program to keep borrowing costs low for companies and households by setting short-term interest rates at minus 0.1 percent while guiding 10-year Japanese government bond yields around zero percent.

Ideas:

There are always positives and negatives related to any action the Bank of Japan takes, or any other activity in the economy. 

Climate change, as it looks now, with the present weather situation in Japan the past two weeks, is a definite clear and present danger to the Japanese economy.

Not just the past two weeks but all summer long, the affects of of the large amount of rain and of course the summer heat, has produced produced a lot of damage in Japan.

And how about the how both the heat and rain affecting the aquiculture sector in Japan?

And then add in all of the damage from the flood and mudslides you have major challenges in Japan.

But unfortunately, its somewhat like that every summer. And of course this past winter with the huge snowstorms around the west coast area and Nagano that stopped traffic on the major highways and the self defense forces had to be help all of the trucks and cars that were stuck on the highways.

Yes, the Bank of Japan should maintain it negative interest rate policy to help as many businesses and families as possible.

The pandemic, as it seems, is worse now than it was back in the spring of 2020.

If the Japanese economy does hit the projected growth of 3.8 percent, with the pandemic now out of control again, it would be good, but the pandemic might have something to say about that.

Article:

Under the new climate-related program, the BOJ will offer one-year, zero-interest funds to financial institutions for their loans and investments in such products as green bonds to tackle climate change. Rollovers will be allowed for an unlimited number of times under the scheme that will be effective until March 2031.

A growing number of central banks have become keenly aware of the need to address climate change but they differ on how far they want to get involved. The European Central Bank and the Bank of England are seeking to factor climate change considerations into policy but the U.S. Federal Reserve is perceived as having reservations, with Chair Jerome Powell saying climate policy is for elected officials.

In a calibrated move, the BOJ is underlining its commitment to addressing climate issues while seeking to remain neutral as a central bank by leaving it up to private-sector financial institutions to make decisions on climate-related loans and investments.

Ideas:

Yes, unfortunately, for some, or many, climate change is a political situation, and some think banks and related groups should not get involved.

Unfortunately with that outlook, these days, nothing might be done. Its good that the Bank of Japan has decided to try and do something.

Climate change funding is not easy as it requires many companies and industries to change how they do things. 

Just recently the EU also has come out with some new ideas related to car emissions. Of course many car companies are not happy with it because it means re-tooling their factories and or new parts in the cars which could makes the cars more expensive in the future.

So the idea is the Bank of Japan provides funding at  near zero interest rates to the banks which in turn will use the new financial resources to help companies and investors transition to new products and services that can help reduce climate change.

Article:

No specific incentives such as paying additional interest will be offered but private-sector banks will be given more exemptions from the negative interest rate applied to some of the funds they park at the BOJ.

The BOJ surprised analysts and financial markets last month when it announced a plan to launch the new fund-providing program. Riding the global momentum for decarbonization, Japan has pledged to attain carbon neutrality by 2050, with the government counting on green growth and Japanese megabanks halting financing for new coal-fired power plants.

In addition to the potential longer-term impact of climate change, the BOJ also assessed the near-term impact of the coronavirus pandemic as Tokyo, hit by resurging coronavirus cases, is under a fourth state of emergency, with further progress in COVID-19 vaccinations seen as the key to increased economic activity.

Ideas:

It looks like the Bank of Japan is following on the lead from the EU and the UK to try and get some momentum in addressing climate change challenges.

Just like what happened in the EU this summer with the major floods now no country can deny that the global climate is changing rapidly.

Japan has always been a country with major climate challenges and even more the past few winters and summers.

Of course to make changes it going to cost money for some companies or many. So the Bank of Japan realizes this so they are laying the foundation for banks to proved needed funds to help companies transition to a more carbon free environment and or any other green innovations that come along in the future that might Japan become an more green society and economy.

The elimination of coal-fired power plants will not be easy because Japan or society seems to not want nuclear powered plants. So what is the alternative. 

If the situation in 2011 had not happened perhaps Japan and the Japanese society would not have thought much about the use of nuclear power as a source of energy.

Yes, vaccinations are important, but at the same time, the virus situation is even worse than what it was in the spring of 2020. How much is the economy going to be affected is a challenge. 

Article:

The growth outlook for the Japanese economy was cut for fiscal 2021 through next March but gross domestic product is expected to increase 2.7 percent in fiscal 2022, rather than the 2.4 percent expansion projected earlier. The core consumer price index excluding volatile fresh food items, a gauge of inflation, is now forecast to rise 0.6 percent from a year earlier in fiscal 2021, instead of the earlier estimate of a 0.1 percent gain.

"Japan's economy has picked up as a trend, although it has remained in a severe situation due to the impact of COVID-19 at home and abroad," the BOJ said, maintaining its assessment.

To continue to support the economy and accelerate inflation toward its 2 percent target, the BOJ will buy exchange-traded funds, or investment products comprising a variety of stocks, as needed with its annual purchase limit set at 12 trillion yen ($109 billion).

Ideas:

If the Japanese economy does grow 2.7 percent that would be good. But it needs to be remembered how bad the economy was, so a 2.7 percent growth in reality might not be that much.

And it needs to be remembered, not all sectors grow at exactly the same rate. So there might be some sectors, such as the export sector, which is and will see excellent growth, but some parts of the services sectors, such at hospitality and tourism, might not see much growth if any at all. 

For example just this week several hotels seemed to have closed until January of next year, hoping that the virus situation might be less then and customers will begin to come back to the hotels. 

An increase of inflation from 0.1 to 0.6 might look good but its too early to say that there is an increase in real demand in the economy which can help increase inflation. Of course supplier prices are another reason inflation might be increasing some. 

An increase in inflation or prices, can sometimes indicate that overall demand in the economy is improving, but at the same time it can mean supplier prices are increasing to which can sometimes be passed on to whomever is next in the supply chain.

To to be fair and honest, for now, the Bank of Japan maybe should not concern itself with its 2 percent target, as it been trying to reach the target the past seven years without much success.

The Bank of Japan, for now and in the foreseeable future should continue to focus on helping companies and families survive the pandemic.

Article: 

Unlike in the United States and some European nations where inflationary pressures have been building up in line with the reopening of their economies, Japan appears to be an exception. The core CPI has been hovering around zero percent and the BOJ's elusive 2 percent target is still far off.

Despite economists saying such inflation overseas is likely to be temporary, rising material costs is a source of concern for Japanese companies, which are reluctant to raise prices when consumption lacks strength.

Ideas:

Yes inflation challenges appear on the horizon in the EU and the US but mostly likely its about increasing demand which might be a good thing for the respective economies.

But Japan, for whatever reason, appears to always be an exception. The Bank of Japan has tried for the past seven years to get inflation to the 2 percent level, without much success.

So that brings up an interesting question, on the issue of inflation and or any other situation, just how much influence does a central bank have on situations in an economy and can they really change them?

Rising material costs are a major challenge for any companies, but even more now, and the pandemic continues to affect supply chains. 

And yes companies are not going to raise prices if there is not enough consumer demand in the economy.

But that has been the challenge for the Japanese economy recently. While consumer spending is around 50 percent of Japan's GPD, it doesn't seem to be enough and or doesn't seem to reach its potential for an economy has large as Japans.

Perhaps consumer spending should be 60 to 65 percent in Japan instead of always staying around the 50 percent level, which is what it is in most advanced economies.

So again if the Bank of Japan wanted to try and get more consumers spending in the economy what more can or could it do, since what it has tried so far as not had much affect in reaching the 2 percent inflation goal.

Have a nice day and be safe!

Japan Minimum Wage:

 https://mainichi.jp/english/articles/20210712/p2a/00m/0op/010000c

Article: 

Discussion in a labor ministry panel on raising the minimum wage in Japan is approaching its final stages. The move would mark the second time since the outbreak of the coronavirus in 2020 for the minimum wage to be revised.

From fiscal 2016, the minimum wage had been raised by at least 3% for four consecutive years. But due to the effects of the coronavirus last year, the national average was raised by just 1 yen to reach a weighted average of 902 yen (about $8.19) per hour.

The role of a minimum wage is to guarantee an income under which people can live. But at 900 yen an hour, even if a person works a full 40 hours a week, the amount they earn in a year would be under 2 million yen (about $18,160).

Ideas:

The minimum wage is supposed to help low income workers have somewhat of a livable wage. But unfortunately, in some cases, it doesn't have that affect.

In some cases or many cases the person earing the minimum wage doesn't work enough hours to help the live.

Sometimes, it because they are only part-time workers and the company won't give them more hours and or they can't work more hours.

Sometimes there are company budget restraints, in that a company just can't afford to have part-time workers too many hours.

And sometimes a company might actually reduce worker hours because the minimum wage, when it was raised is cutting too much into the companies profit margin, maybe for example at franchise convenience stores that operate already on very thin profit margins.

Article:

By international standards, Japan's minimum wage is low. In Britain, Germany and France, even amid the outbreak of the coronavirus, the minimum wages of those countries have risen by around 1% to 2% a year.

A proper increase in the minimum wage is necessary to ensure that the pay gap between those in regular and nonregular employment does not widen.

In the annual spring labor offensive, in which labor and management in Japan negotiate wages, there has been a trend for wages to increase primarily for regular employees, even under the coronavirus pandemic.

Ideas:

The European countries for many years have made the social welfare of it citizens a priority including a high minimum wage with yearly wages.

Japan is a little behind the game with regards to a livable minimum wage.

In the 70's 80's and most likely 90s' the income gap globally was not a major challenge and or wasn't thought of a a major problem.

But ever since the 2008 Financial Crisis the income gap among workers and the overall population in countries as received a lot of attention.

Its also estimated that now upwards of 30 percent of all workers in Japan are either contract or part-time, and possibly many of these workers are not only making a minimum wage.

Of course companies want to reduce costs but it can have an affect on the economy.

For example those who don't have a wage that is equal to or similar to regular workers, have less income to spend. With less to spend or disposable income, it can affect the economy, as consumer spending some say it up to 50 percent of Japan's GDP.

Article:

At the same time, many nonregular workers are employed in the restaurant and retailing industries, and for them the effects of an increase in the minimum wage are large. Even during the spread of the coronavirus, workers in these industries have been providing services that are essential for our daily lives. Efforts must be made to provide them with better remuneration.

Disparity between regions is also a problem in Japan. Tokyo has the highest minimum wage in the country, at 1,013 yen (about $9.20) per hour, which is more than 200 yen per hour higher than the minimum wage in some other prefectures, such as Akita. Even when factoring in price differences in those regions, the delay in improvements in regional areas is clear.

Ideas:

Of course the difference in the minimum wage among the regions might be related to overall costs in a region, as Tokyo and Osaka are more expensive to live in than the provincial small areas.

Yes, many of the workers in the hospitality and services industry don't make a lot and they need to be compensate even more. And yes they are on the front lines, meaning they come in contact with people everyday during the pandemic time.

But even without the pandemic most of the workers in services don't make enough.

And again it can have a huge impact, eventually, on the economy, as their extra income, after paying their monthly bills is not enough to go out and use it in the economy. 

So they are a group that is not able to participate fully in the economy compared to full-time workers.

Article:

The government, which last year adopted a stance of prioritizing job retention over increasing wages, has set a goal of increasing the minimum wage to "an average of 1,000 yen at an earlier stage." Managers, however, are asking for the current level be maintained, on the grounds of worsening earnings. Indeed, the restaurant, accommodation and other industries have seen major declines in demand due to the spread of coronavirus infections. If the minimum wage increases, it will inevitably have an impact on their management.

To enable these industries to raise employees' wages, the government should introduce measures to help improve their performance. It is essential to enhance subsidy programs while listening to the voices of people in the field.

Article:

This situation is exactly what is going on in a country next to Japan. The government has raised the minimum wages in steps over the past few years, but many companies are unable to maintain a profit.

What they companies have done, as mentioned above, restaurants, convenience stores, small factory companies have laid off workers and or cut worker hours to maintain some kind of profit margin.

The companies just can't survive with the current minimum wage.

And now the the pandemic and the decreasing demand many of them are not surviving.

But what some of them have done is moving into the automation of some services such as fast food places where they use kiosks for customers to order food instead or having workers for that service. The same is happening at some convenience stores.

Just like what Uniqlo and GU have done in Japan with checkouts locations in the stores. And of course some restaurants have kiosk for customers to order and then get their ticked and wait for their order.

Subsidy programs were also used in the country next to Japan, but it didn't seem to help much.

Article: 

Major companies also have a big role to play. In the manufacturing industry, subcontractors may have to raise the prices of products in some cases to cover wage increases. Consideration should be given to the actual state of affairs.

Precisely because of the downturn caused by the coronavirus crisis, the government must create an environment enabling the minimum wage to be raised. That will help lift Japan's economy.

Ideas:

Yes, even in the country next to Japan many subcontractors or small companies have had to raise product prices as a way to cover costs.

But also, there is another problem called "market power." Many of the big companies dictate to the smaller subcontractor companies what prices they will pay. 

So even if the smaller subcontractor wanted to raise prices to cover its increased salary costs the larger company will reject the prices as they have all the market power, and as such the smaller companies don't make a profit.

Yes, if done correctly an increase in the minimum wage will help the workers. In turn they might have more extra or disposable income which means they can participate more in the economy, spend more, and the economy will grow faster.

Its a major problem in the country next to Japan.

Have a nice day and be safe!

Japan June Wholesale Prices:

 https://mainichi.jp/english/articles/20210712/p2g/00m/0bu/074000c

Article:

TOKYO (Kyodo) -- Wholesale prices in Japan surged 5.0 percent in June from a year earlier, due to rising commodity prices amid hopes for an economic recovery from the coronavirus pandemic, Bank of Japan data showed Monday.

The prices of goods traded between companies marked the fourth monthly increase and followed a revised 5.1 percent rise in May.

Among major gainers, petroleum and coal products jumped 42.0 percent from a year earlier, and nonferrous metal prices gained 37.6 percent.

Ideas:

The rise of prices can sometimes, be related to two ideas; the first being the expectation of increased demand for certain products in the future.

Or the already increase in demand for products.

But to see the increase in prices from a year earlier of course is or was related to a decrease in demand when the pandemic hit a year ago.

Also domestic and global logistical challenges might have contributed to the increase in prices.

Article:

As economic activity picks up in parts of the world where COVID-19 vaccinations have progressed, demand for products such as woods and scrap also rose. Prices of lumber and wood products increased 18.6 percent, while those of scrap soared 74.8 percent, the BOJ data showed.

"The global economic recovery boosted prices of commodity and a wide range of products," a BOJ official said.

Japan's economy has benefited from rising demand from its major trading partners such as the United States and China. But the country is still battling with rising coronavirus cases, with Tokyo placed under a fourth COVID-19 state of emergency less than two weeks before the Tokyo Olympics.

Ideas:

The global economy is/was on track for some kind of recovery, but with the surge in the variants now, Q3 and the summer period might not be as robust as expected.

It seems in many countries the variants has increased despite the continued vaccination globally.

However, at the same time, Japan and South Korea, seemed to have been hit especially hard related to the new variants

Not to place blame, but most likely in both countries, either a lack of supply and or a lack or getting enough vaccines might be causing some challenges now.

Article:

Inflation worries have emerged in the United States and some European nations in recent months. Japan has so far not seen such concerns emerge as the BOJ is still far from achieving its 2 percent inflation target. Wholesale prices affect consumer prices.

Companies are seen as reluctant to pass surging raw material costs onto consumers at a time when demand remains subdued. But their failure to hike prices could hurt their profits, economists say.

Import prices gained 28.0 percent from a year earlier while those of exports increased 11.3 percent, both on yen terms.

Ideas:

Inflation might be considered both a positive or a negative depending on which side of the equation you are on.

If you are a consumer, such as a person or household or even a business consumer, buying from another business, a rise in prices might not be a positive.

But if you are a supplier, inflation might be seen as positive to you, as now there is more demand for your products

Of course as a supplier, if you have to buy intermediate products for your final products, and the prices of those products are increasing, then you might not like that.

So then you might "pass on" the increased costs to whomever buys your final products in the marketplace.

Yes, suppliers might be reluctant to "pass on" the increased cost to buyers, but at one point, to survive, they might have to decide how much can they afford pass on in order to survive, without losing a lot of sales.

As far as the BOJ 2 percent inflation target is concerned, it seems since about 2013 the BOJ has been targeting inflation to help the economy, but without much success.

Perhaps at this time, and especially with the idea that demand is very low in Japan, the BOJ should shelve the idea of trying to reach a 2 percent target, and focus more on helping businesses survive, especially now with an increase in the variants and the new and continued emergency measures in place.

The idea that this summer is going to be somewhat back to normal looks like its not a possibility as of now.

The BOJ and and the Japanese government need to continue to help as many businesses as they can survive.

And when they are helping businesses they are helping consumers, and businesses are consumers too with families.

Demand is not going to get back to normal anytime soon, and the 2 percent inflation rate will not be reached anytime soon until most businesses and most consumers finally feel good about the economy, their jobs, their businesses, and their future.

Have a nice day and be safe!