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!

Japan Trade Deficit: Updated Feb. 24, 2026.

Japan logs trade deficit of 1.15 tril. yen in Jan., 1st in 3 months

Article source:  https://mainichi.jp/english/articles/20260218/p2g/00m/0bu/023000c

Ideas

The Japanese economy seems to be heavily dependent on exports as it really doesn't have anything else that is driving the economy at this time.

The US outside of China has been Japan's largest trade partner, like many countries is heavily dependent on trade with the US and demand for Japanese products in the US continue to be strong reason to keep going forward despite the tariff situation.

Yes, despite the tariff situation with the US, Japan has wisely diversified its export situation to include many other countries, economies, and regions to try and offset the US tariff situation so that Japan doesn't need to rely on the US only for trade.

And it's seems that maybe Japan has been able to get back into the semiconductor game or situation by investing in semiconductor parts assemblies and not just the manufacturing of semiconductors with Taiwan and South Korea now do so well.

It also seems that maybe China, just maybe, is beginning to get back into the game too with trading more with Japan despite the so-called less than good diplomatic relations at the moment.

Japan is a resource-poor country which means it has to import much of what it needs with means to its susceptible to the whims of the global market and the prices changes that often take place.

And then there is the global energy market or markets that at times can be up and down due to the again whims of the energy cartels that control most of the energy markets.

Of course we can't forget the US tariff situation and Japanese motor vehicles which are probably being hit the hardest as of course they are the highest priced exports to the US and US consumers might be re-thinking if they want to buy a new Japanese car, due to the possibility that car dealers are passing-on their tariff costs to the consumer.

The same might be said for Japanese pharmaceuticals as they are are seeing the effects or US consumers are seeing the effects of US importers and companies passing-on the tariffs to the US consumer.

It needs to be made clear who exactly pays for the import duties, the importers or ultimately the US consumer, as most importers if not all pass-on the 15 percent tariff rate to the consumer which means consumers, despite all the other inflation things going on in the US have to now pay for any of the Japanese products they might want to buy but not at a much higher price.

Some might say a 15 percent tariff is really not that much but if you look at the price of a Japanese car that 15 percent can be quite a lot and no US importer is going to absorb that much extra cost and they will eventually pass-on the extra cost the the US consumer.

Not to criticize too much, but the powers to be in the US don't seem to know anything about economics 101, or beginning economics courses. Trade or global trade is a very complex system that just the idea of imposing a tariff on products causes all kinds of disruptions including global supply chains, disrupts multiple economies around the world and just doesn't work as intended.

A tariff is nothing more than a tax for the consumer as companies never really absorb the tariff tax and always pass-on the tax if they can do it which is most of the time, as they have to maintain their profit margins and a tariff or tax is really just a cost for them.

Companies are just as upset as consumers are with the tariff situation and again its an added cost to them and they don't like it anymore than consumers do as they know consumers can and will walk away if the price become too much for them to handle.

Yes, export have been the economic driver for the Japanese economy for the last 50 plus years but the US tariff situation seems to have upended that and there just don't seem to be enough car shipments to other countries that can offset the losses from the US market.

Japanese companies, whether good or not so good, have always been reluctant to pass-on their increased costs to the next in the supply chain including the final retail customer. While many Japanese now do it due to concerns of profits related to shareholders and others, some companies still just absorb the costs as much as possible.

It seems the Chinese economy is going through some kind of transition and it's hasn't seen as much economic growth as before. And of course there is the diplomatic situation now between Japan and China which might be limiting both imports and exports to both countries.

Even though exports and imports edged up its not like the glory years when there seemed to be a free-for-all related to trade between the two countries in the early 2,000's or before.

But at the the same time, despite the diplomatic constraints trade, appears to be maybe getting back to some kind of normalcy or at least a new normalcy, using the term often used during the pandemic.

However, as usual, China always seems to have something up their sleeve whenever there is some kind of diplomatic friction between them and another country, such as using critical materials as a possible diplomatic tool is nothing new for them.

Trade is nothing more than cooperation between two countries and in reality its never about competition but again cooperating as one country makes something that another country needs or wants and another country is willing to pay to get that product or service.

It's the same as going to a supermarket or even Amazon as Amazon has something a person needs and they are willing to sell it to them as long as the customer is willing to pay, as its the same with trade, buying and selling between two countries two economies.

And even with the EU its about cooperation and not about competition in its best form and Japan has products that maybe countries or even consumers want in the EU and hopefully the EU has products that customers in Japan want too.

For whatever reason, trade between the EU and Japan has been less than good as maybe for whatever reason, companies and customers in the EU, lately, just haven't wanted or needed as many Japanese products as before. 

It might be related to the Ukraine situation or it might be related to something else such as global prices are too high and or the EU currency exchange and the Japanese yen, have made products from Japan going to the EU a little too much for some consumers in the EU.

Have a nice day!

Japan Foreign Visitors: Updated Feb. 20, 2026.

Japan's Jan. foreign visitors dip amid China spat, 1st fall in 4 years

Article source: https://mainichi.jp/english/articles/20260218/p2g/00m/0bu/041000c

Ideas

Whether good or not so good, the powers to be in Japan just can't seem to stop doing things that the Chinese powers to be dislike. They take one step forward and ten steps back every few years.

Chinese foreign visitors to Japan used to be Japan's largest foreign tourist group, at least before the pandemic, but since then its been more of a hit and miss situation with China and visitors from that country.

If there were 3.6 million visitors in January that is still a significant number of tourists entering Japan staying at Japanese hotels, buying things as Japanese department stores and convenience stores, and of course going to a lot of touristy places spending money in Japan.

Some might say, and its a small group, who really don't want foreign tourists in Japan or any foreigners at all and especially they want new measures to reduce the over-crowding in some places like Kyoto in the Osaka area that has become a major tourist spot for foreign tourists recently.

Ever since the pandemic or just after the pandemic, flights from China has been very slow to return to the pre 2019 level when there seemed to be an explosion of flights coming and going to and from mainland China.

It seems, as the weather in Thailand is much warmer than what it is now in Japan, that Thailand is not the number one Lunar New Year holiday destination for many Chinese tourists now.

Some might say, again, that the decrease in Chinese tourists to Japan might be a positive as it might reduce the over-crowding and might actually calm down the noise by some who are against anything foreign in Japan, but its too early to tell just yet.

Even though the Chinese powers to be suggested Chinese tourists should not go to Japan, 367,000 people still went to Japan which is still a significant number of Chinese tourists spending money in Japan.

And again, yes the Japanese powers to be keep making remarks that the Chinese powers to be dislike again which again causes un-needed friction between the two countries.

As this blog rarely says anything negative about the Japanese powers to be, it seems the new Prime Minister in Japan is more head-strong or more stubborn than previous Prime Ministers and probably won't change much of what was said back in November.

Snow sports tourism seems to be the latest trend for tourists going to Japan as other than Mongolia or China there really isn't much in the way of snow sports tourism in Asia. Even South Korea's snow tourism areas are not really that well developed compared to Japan's snow tourism areas.

At the same time, despite the demand for snow sports tourism, there are probably just as many foreign tourists who might not care much about the snow sports and just want to experience some things in Japan that might might not be able to do or see in their home country.

It used to be, at least before the pandemic, that getting a ticket from Seoul Gimpo airport to Tokyo Haneda airport was very easy but after the pandemic ended and Japan re-opened its borders in 2023 getting a ticket became much more difficult and it seems everyone and anyone in South Korea suddenly wanted to go to Japan, and probably globally too, airline ticket prices almost tripled or seemed that way.

Taiwan, even though it suffered significantly from the Japan occupation, there doesn't seem to be that much if any negative noise about it as they either have let by gones be by gones or just moved on in life and tourists from Taiwan seems to be very robust and the relations between the two countries seems very stable.

Ticket prices between Japan and Australia are probably not cheap and the same can be said for ticket prices between the US and Japan, but people want to travel so they are going to travel even though airline ticket prices have increased significantly since the pandemic.

Have a nice day!

Japan Rice Price Situation: Ideas Later.

Japan rice price may dip to 'fair' 3,250 yen per 5 kg by June: expert

Article source: https://mainichi.jp/english/articles/20260213/p2a/00m/0bu/030000c

Article to be deleted after ideas.

Article:

TOKYO -- Japan has been beset by high rice prices for months, with a 5-kilogram bag selling for an average of 4,188 yen (approx. $27) for the week of Jan. 30, according to agriculture ministry figures. Now, an agricultural policy expert has calculated that a truly fair price for that same bag would be 3,250 yen (about $20).

Prices spiked during a rice shortage last year, but they remain high even though the staple has returned to store shelves, and the most recent harvest was said to have been a good one.

Rice policy became a key issue in the House of Representatives election. What price would satisfy both consumers and farmers? The Mainichi Shimbun asked Kimio Inagaki, a research fellow at Mitsubishi Research Institute Inc. and an expert on rice issues, who calculated that "fair" figure.

A 'waiting game' until around June

"In broad terms, prices are on a downward trend, but they aren't falling easily. There's not as much surplus as people think," Inagaki explained while presenting data.

The production of staple rice for 2025 was generally favorable, with a harvest of about 7.47 million metric tons, an increase of 676,000 tons from the previous year.

However, that supermarket average of 4,188 yen per 5 kg for the week of Jan. 30 was down just 95 yen (some 60 cents) from the previous week. Prices have remained in the 4,000-yen range since September 2024.

The annual increase of 670,000 tons may seem reassuring, but Inagaki remains cautious. "Looking at the longer term, there was a total shortfall of about 1 million tons in the crops between 2022 and 2024. Although approximately 660,000 tons of reserve rice was released (by the government), there's still a shortage of 300,000 to 400,000 tons," Inagaki said.

He added, "Demand for the 2025 rice has not been finalized, but it's estimated at 6.97 million to 7.11 million tons, meaning supply would exceed that by 360,000 to 500,000 tons. However, simply seeing a 670,000-ton increase shouldn't bring complacency. There is only about a 200,000-ton buffer, so if growing conditions are poor for the 2026 crop, the situation would be uncertain."

Furthermore, the rice industry apparently cannot easily lower prices due to certain circumstances.

Japan Agricultural Cooperatives (JA) across the country provide farmers an advance payment. But recently, some private traders have offered farmers higher prices than these advance payments to procure rice.

"In response to the rice crisis ... some regional JA branches offered amounts equivalent to twice the usual rate, around 30,000 yen (some $190) per 60 kg, last year. Selling rice purchased at such high prices cheaply would incur losses. So for now, it's a waiting game," Inagaki said.

So will rice prices remain high? Inagaki suggests not. He believes that the distribution side, including supermarkets, will reconsider rice prices between June and August. The indicator of surplus or shortage in the rice industry is private-sector distribution inventories at the end of June, according to Inagaki.

The appropriate inventory level is between 1.8 million and 2 million tons. If stocks fall below that range, prices will increase, and if they exceed it, prices will decrease. "If the 2025 crop is sufficient and the 2026 crop is expected to grow well, distributors and retailers won't want to hold excess inventory, so they will likely lower prices and sell off stock," Inagaki said.

What is the fair price?

The pressing question is what that price should be.

I believe the appropriate price is 3,250 yen per 5 kg, including tax," Inagaki said.

The benchmark takes into account producers' ability to maintain their livelihoods, consumers' financial situations, and competitiveness with imported rice.

Based on data collected by the Mitsubishi Research Institute, Inagaki calculated that if the sale price is 15,000 to 18,000 yen (roughly $95 to $115) per 60 kg for farms of 20 hectares or more, farmers can adequately sustain their operations and livelihoods.

In this scenario, the negotiated price from JA and others to wholesalers would be around 20,000 yen (about $127) per 60 kg, and the retail price, after storage and milling costs, would be approximately 3,250 yen per 5 kg.

Considering trends in imported rice, this amount could be described as within an acceptable range.

Following the 2024 rice shortage, private traders accelerated imports outside the government's tariff-free quota framework. Although a tariff of 341 yen (about $2.20) per kilogram must be paid, imported rice remains cheaper than domestic rice. In 2025, imports surged to 96,834 tons, 95 times the previous year. About 80% was from the United States, often retailing at around 3,500 yen (about $22) per 5 kg.

"This level isn't necessarily appropriate in the long term," Inagaki cautioned. He added, "However, amid current inflation, 3,500 yen per 5 kg might be acceptable for consumers. Domestic rice needs to be priced below that for consumers to choose it. From the perspective of promoting domestic agriculture, 3,250 yen for domestic rice is a realistic price."

Continued production increases are difficult

For 2026 staple rice production, the agriculture ministry has set a guideline of 7.11 million tons, below the 2025 crop. However, as of Jan. 16, the combined production targets set by 40 out of Japan's 47 prefectures totaled 7.25 million tons. Does this suggest strong motivation among producers to increase output?

Inagaki responded, "Most people understand that continually increasing production is difficult."

After a period of increased output immediately following World War II, Japan achieved rice self-sufficiency in the 1960s. Since then, production has become excessive while demand has continued to decline.

"For producers, the fear is a price drop. To increase production, demand must be developed."

While exporting surplus rice overseas may seem viable, Inagaki is skeptical. He stated, "Globally, Japanese rice is too expensive to be competitive. Targeting the gourmet market as a high-end Japanese food is one thing, but if the aim is to have it imported as a staple food by other countries, we would need to assume responsibility for stable supply. I don't think a plan to use exports merely as a buffer would earn trust."

A need for price assurance

After the rice shortage became apparent around the summer of 2024, the Shigeru Ishiba administration, established that fall, advocated for increased production. However, the subsequent Sanae Takaichi administration has shifted to a "production in line with demand" policy. Agriculture Minister Norikazu Suzuki's remark at his inaugural news conference that the government would not "commit" to a rice price also drew attention.

However, Inagaki suggests that "the government should instead clearly indicate a target price."

He added, "Controlling production quantities is meant to stabilize prices. The purpose is to ensure consumers can buy rice with confidence, so a stance of not committing to getting involved in prices is inconsistent. The government should specify a price that allows consumers to buy with a peace of mind and consider compensation for farmers if prices fall short."

Japan Economy Growth: Updated Feb. 19,, 2026.

Japan's economy grows 0.2% in Oct.-Dec., spending edges up, exports weak

Article source: https://mainichi.jp/english/articles/20260216/p2g/00m/0bu/026000c

Ideas

The Japanese economy is a very stable economy but because its both a mature economy and seems to be stuck in a somewhat stagnant mode it doesn't grow very much as a 0.2 percent annualized growth indicates.

Annualized growth is just a projection of estimate of what the growth would be for the entire year and 0.2 percent, again, is not that much, but at the same time as the Japanese economy is one of the 5 largest economies in the world that might still be considered a lot of economic activity.

And yes, unfortunately, exports and especially auto shipments to the US decreased as it was not a surprise and has been expected ever since the tariff situation went to effect.

The real surprise might be related to personal consumption or consumer spending increased even through inflation in Japan continues to be a challenge for Japanese households and consumers overall.

Again as Japan is a very mature economies it doesn't grow that much as it takes a significant amount of resources related to business investments, consumer spending, foreign investments in Japan to grow the economy.

And an increase of Japan GDP of 0.1 percent for the July-September period is about what Japan's GDP has been doing over the last few years, so its no surprise as again, the economy seems to be stagnant or stuck in a rut and can't seem to get out of it, and now with the US tariff situation placing more constraints on the economy is going to take even more resources to get the economy moving again.

Not to criticize or be negative but economy growth estimates or projections can sometimes be like a crap shoot as you just don't know exactly what's going to happen in the future as you are dealing people and behavior and its a very complicated situation to estimate.

But a forecast of 1.48 percent might have been a little too positive as even the best of times recently hasn't seen that much annualized growth. But at the same time, there is always some kind of pressure to make the estimates, forecasts, or projections sound better than what is really happening as a way to keep the financial markets happy and not go into some kind of nose-dive.

As the article suggests you can easily see the difference between nominal GDP growth which includes inflation and real GDP growth without inflation. So inflation in the nominal GPD was about 3.4 percent which is where most articles have suggested inflation has been at in Japan for a long time or ever since the pandemic at least.

And again, an real GDP of 1.1 percent is about where the Japanese economy is at and probably is not going to grow more than that as even at 1.1 percent that might be considered a positive as that is still a lot of economic activity for the 4th or 5th largest economy in world.

Private consumption or consumer spending, while yes, maybe half of the economy, is still not where is should be as it should be even more at about 55 or even 60 percent of Japan's GDP but unfortunately, due to an ageing population and other factors such as inflation and or the fact that traditionally the Japanese are more savers than spenders it hasn't been a able to get to 55 or even 60 percent where is really should be.

As far as mobile phones are concerned it can be suggested that the I phone has taken much of the market share in Japan and maybe Samsung has some market share and yes, even maybe some Chinese mobile phones are making some in-roads in Japan these days.

For accommodations, the huge increase in foreign tourists might be boosting the hotel industry as each month it seems is a new record in Japan for foreign arrivals.

And its no surprise that spending has been in decline due to the increase in supermarket price increases as Japan has to import much of what it needs, including food resources and importers and wholesalers pass-on their increased costs to the next in the supply chain including the final retail customer.

And yes, as the US tariff situation has hit Japan, even the domestic car market is feeling the effects as domestic car dealers might be under pressure to increase prices to make up for the losses in the US, which of course means Japanese consumers might be less than happy about buying a new car now or even leasing a new car now.

Personal consumption or consumer spending is always a little slow as Japanese consumers just don't spend like US consumer or more like how US consumers used to spend as even in the US inflation has reduced spending somewhat there too now.

At the same time, higher wage increases in Japan is not going to be a guarantee that it will improve consumer spending in Japan, as it must be remembered that up to 70 percent of the Japanese workforce doesn't work for the large name-brand companies but for small and mid-size companies which don't have the profit margins needed to match the wage increases of the large companies in Japan, As result inflation is still going to be a major challenge for most Japanese households.

Yes, salaries will probably increase in April but not to the level that is going to diminish the inflation situation and especially for the 70 percent or so that work for small and mid-size companies as they will continue to struggle with inflation which means their disposable income is going to continue to be challenged and their purchasing power is also going to be compromised in the future.

But to be fair, its going to take more than the 5 plus percent increase in wages, given out last year, to help all Japanese households as again, the small and mid-size companies just don't have the resources needed to match what the large companies have in Japan, which again, not to continue to beat same tune, but consumer spending is not going increase that much unless all Japanese households or all Japanese consumer can get a significant wage increase in April and not just the large companies workers in Japan.

Yes, its possible prices could begin to decrease during the January-March period, but like the article suggests consumers have got to see and feel that its going to last and not just a one month situation and that could take several quarters before Japanese consumers are convinced that prices are finally decreasing as they will see it in their disposable incomes and in the increase in their purchasing power at the the supermarket. 

And yes, its possible the effect of the US tariffs on Japanese auto shipments to Japan has not been as bad as expected, but at the same time its still more than what it was before the US tariff situation took effect or before March/April 2026 when the tariffs were suggested.

And then there is always the idea that demand for Japanese autos might have just hit a mild downturn which happens sometimes as consumers might have taken a short break from buying a new car in Japan. And there are many variables that could be the reason for the weak auto shipments and not just the US tariff situation.

The article doesn't say if the cabinet official is form the US or from Japan, but the language used suggests its a US cabinet official and of course the person is going to suggest the tariffs are having an affect on Japanese autos or consumers, but again, that's just one person's opinion.

And yes, are are still significant uncertainties in how all of this is going to play out in the long-term as unfortunately, due to past behavior of the US powers to be can change the tariff situation in their favor tomorrow if they want or need to.

Yes to be fair, as with any situation, most likely Japanese consumers are not sitting around thinking about the US tariff situation as they have their own lives to manage and live without all of the noise in the media these days.

Yes, these days everything is now interconnected which means what happens in China affects EU countries and what happens in Brazil affects countries in Asia and so on, and its a hyper connected world today and there is no country that is alone as what happens unfortunately in one country can affect another country very quickly.

And as the supply chains globally are so hyper-connected that if there is a glitch in trade or even the supply chains it/they can have significant major outcome all through the trade zones as or the global supply chains now.

Not all foreign tourists that go to Japan are big spenders as some might be there on limited budgets, but for the most part, the Chinese in the past, with their income increasing significantly, have been the biggest spenders in Japan, but as Chinese tourists going to Japan has seen a significant decrease, foreign spending by other nationalities might not be the same as before or reach the level of the Chinese tourists of before the pandemic period.

A decrease of 0.3 percent in imports into Japan is not really a significant drop as it could just be related to the margin of error amount in statistical reporting and or it could just be slight increase in the Japanese yen, which helped import prices a little more which means value might have not increased that much overall.

Business investment in Japan is very important due to the fact that in the GDP there is consumer spending + business investment spending + government spending and then of course export - imports. 

As Japanese consumer spending is at times weak or not up to the potential where it should be the other variables need to kick and try to offset the less than needed consumer spending in the Japanese economy.

But it was good that demand for semiconductor devices was stronger than normal and of course research and development services which are always important for all economies.

But whether good or bad, the increase of software bought by companies due to a supposed labor shortage could be seen as maybe companies just can't find the labor needed for their companies and or they aren't willing to increase their costs as needed to bring the needed people for their companies.

Housing investments in any economy is a major variable and in the US right now it has been suggested that housing investments are decreasing due to the fact that young families just can't afford to buy a new home which means less growth for the US economy in the future.

And the same thing is happening in South Korea too as young families just can't afford new homes and apartment rentals have been increasing significantly the last few years.

Nominal GDP is not really that important except to see the increase in inflation as nominal GDP include economic growth plus inflation which real GDP growth is just economic growth without inflation, which is more reliable metric to look at.

But an increase of 0.6 percent for the July-September period is really not that much of an increase but if you look at inflation alone it has been suggested inflation is around the 3 percent level which is still above the Bank of Japan's target of 2 percent, which is considered a manageable level for most economies.

Have a nice day!

Japan Real Wages: Updated Feb. 13, 2025.

Japan's real wages fall 1.3% in 2025, down for 4th straight year

Article source: https://mainichi.jp/english/articles/20260209/p2g/00m/0bu/019000c

Ideas

The disposable income of Japanese households continues to go down as wage increases can't seem to keep up with inflation along with the increase in price increases in Japan.

It must be remembered or considered, that up to 70 percent of Japanese workers don't work for the large name-brand companies in Japan but work for the small and mid-size companies which usually don't pay the same wage increases as the large companies as their profits margins are just too thin to try and match the large company wage increases.

And as the disposable incomes keep decreasing for Japanese households that means, after bills are paid, they have less and less money to spend in the economy, which means the economy is not going to grow as most consumers just don't have the needed extra money to spend on things in the economy.

Nominal wages are wages which includes the increase in inflation added on but is deceiving, as it looks good and looks like a consumer has more income but in reality real income is what matters for consumers and households everywhere.

Again, nominal wage increases just show how much inflation as increased as wage earners can see it in their paychecks but it really doesn't do anything for the disposable incomes of consumers as in the end, due to inflation, they actually have less to spend.

Consumer price increases of 3.7 percent might be even noticeable for most consumers who usually are just too busy to notice small increases in prices and if buying at a supermarket after a busy work day or a mother with two children just trying to get in and out of the supermarket, again they might not even notice the price increases.

But ask the low-income groups or the fixed income groups if they notice a 3.7 percent or even a 3.2 percent increase in consumer prices and most likely they can see and feel the increase in prices as they have a much limited disposable income to use in the supermarkets and in the economy, if any at all.

Yes, many Japanese companies at the shunto labor-management negotiations have agreed to increase the wages of their workers, which is of course very good and very needed, but the problem again, the small and mid-size Japanese companies, which might want to do the same thing, just can't do it at the same level, due their thinner profits margins, which means again up to 70 percent of the Japanese work force is still going to effected significantly by the inflation situation in Japan.

To be fair and positive, a 5.39 percent increase in wages is just an average and there might be some that will increase wages even more than that but not to dampen the mood there are going to be some or many that just can't match 5.39 percent as they might want to do and know they need to do it but their profits margins just can't handle a 5.39 percent increase in wage costs.

It has been suggested, in past articles, that many of the large Japanese companies, after the 2008 financial crisis began to sit on large cash reserves due to the possible uncertainty of the global economy at the time, but even today, its is suggested they are still sitting on huge reserves of cash and a increase of 5.39 percent in wages really doesn't seem like that much as they are still being very conservative with their funds.

Part of the problem or challenge is many of the large Japanese companies today are publicly owned which means they are accountable to shareholders who demand and expect a certain level of profit or return in their stock investments and increasing wages beyond 5 or even 6 percent level might be too much for even the large companies if they can't meet the profit projections as that their shareholders expect from quarter or quarter or even year to year.

Yes, private consumption or consume spending might make up to 50 percent of Japan's GDP or domestic product, but if consumers in Japan have decreased disposable incomes due to the continued increase in inflation there no way way consumer spending is going to be close to the 50 percent of GPD as consumer spending might make 45 or 48 or even 49 percent at the very most, and that amount is just not going to increase the growth of the economy in Japan.

It seems, and to be fair, the BOJ is relying heavily on wage increases to help improve economic growth in Japan. And its probably a good idea but again, large companies in Japan are going to do their part but the question mark, as always, is what are the small and mid-size companies going to do or what can they really do if anything to help boost the economy or increase wages enough to boost the economy.

Prices continue to remain high in Japan for several reasons, such as Japan is a resource-poor country which means it has to import much or what is needs as as global prices, due to many factors continue to increase, Japan importers and wholesalers continue to either absorb the price increases and or pass-on the price increases to the next in the supply chain which makes ultimately the final retail customer in Japan.

The other main reason is the variance between the US key rate and the Japan key rate due to the fact that for a period after the pandemic the US central bank kept increasing its key rate to try and decrease inflation while the BOJ kept its key rate almost at zero, suggesting the Japanese economy was just too weak for a rate increase and as a result the large variance between the US rate and the Japan rate as been a significant factor in the Japanese yen being very weak, which increases import prices in Japan.

As noted real wages decreased by 0.1 percent while nominal wages increased by 2.4 percent which means inflation might have increased by 2.5 percent or more from the previous year. 

At the same time, again, it means Japanese household's disposable income or even purchasing power of consumers in Japan continues to decrease which means there is/was less spending in the Japanese economy which again means less or no economic growth for the economy.

Nominal wages might look good or feel good in the short-term but in reality real wages is what matter as it determines purchasing power and the amount of disposable income consumer or households really have too spend in the the Japanese economy.

Have a nice day!

Japan Current Account: Updated Feb. 15, 2025.

Japan logs record current account surplus for 2nd year in 2025

Article source: https://mainichi.jp/english/articles/20260209/p2g/00m/0bu/021000c

Ideas

There are some positives and negatives to why Japan's current account surplus is at a record level for the second straight year. The main reason is at a record again is most likely because of the weak Japanese yen, which allows higher returns on foreign investments and higher prices for Japanese company exports sold in foreign markets.

And there is a negative too such as a weak Japanese yen causes import prices for the Japanese domestic market to be higher than normal, meaning importers and wholesalers have to pay more for products they bring into Japan, and of course they often pass-on their increase costs to the next in the supposed supply chain which might be the final retail customer.

So for the Bank of Japan, which has to sort all of this they have to decide which is best for the Japanese economy, a weak Japanese yen, which increases the current account and at the same time helps Japanese investors in foreign markets and helps large Japanese export companies like Toyota as the weak yen increases their selling price in foreign market or does the Bank of Japan think the domestic economy should be more important and has to deal with the increase in import prices which effects the average Japanese consumer with higher prices.

Japan's current account is like the government's bank account as they use it of course for government spending including a host of budget increases needed to keep the economy moving in the right direction.

The challenge of problem is an increase in the current account should lead to an appreciation in a country's currency, but that for some reason has not happened in Japan or not for a very long time as Japan's currency continues to remain weak.

So what is really going on with both the current account and with Japan's currency situation, as are they really connected or is it only textbook ideas that connect them and is there other real-world situations taking place that has kept Japanese currency weak while Japan's current account is seeing record levels.

Its important to reflect on the idea that Japanese investors are now trading in overseas markets as they are not as loyal to their own country and its the same globally as investors, globally, these days, are looking outward.

And its the same with companies too, as they are not as loyal and maybe never have been and they will invest in any stable economy that can gives them the return they are looking for too just as investors are.

The goods trade, which seemed to take a plunge  of 76.8 percent, while not good, its still not a major problem, as exports increased 2.5 percent but the US tariff situation might have had something to do with the decrease.

And it seems Japan is creeping slowly back into the semiconductor market race as for a long time it was almost completely out of it with both South Korea and Taiwan taking most of the market share.

Japanese food too seems to be making a concerted effort too as their seems to be a continued race these days between South Korea and Japan related to which food is now more popular in foreign markets as both seem to be seeing increases in overseas food shipments.

Unfortunately, Japan seems to be way behind in the services trade area including software, which it seems Japan as all but given up developing any software in its home country.

As such they continue to pay significant royalties to the US and maybe even India these days as again Japan is a hardware focused manufacturing economy and doesn't seem to want to invest in software and or there just aren't any real software drivers in the economy that is making any kind of difference.

Japan seems to have created a new economic driver, which might have started back during the era of the late Prime Minister Abe, when Japan seemed to open up its economy and country to more foreign tourists, and especially to more Asian tourists to come to Japan and spend their money, which now is at record levels.

While foreign tourism might not exactly help boost the economy as much as domestic consumer spending its no doubt helping with economic growth as domestic consumer spending by Japanese households, recently, just hasn't been where it should be for a country which is considered the 4th or 5th largest economy in the world at this time.

Japanese travelers are at a disadvantage as they have to deal with weak Japanese yen which means if they travel to the US, the EU, or even other Asian countries their purchasing power is much less which means they have to spend more, which of course it could be an incentive to not travel overseas.

A drop in the current account for one month should not be that big of challenge as the December holiday period, globally, might have reduced a lot of economic activity as many countries and economies have holidays during the December period.

And at the same time, as the US is one of Japan largest trade partners, again the US tariff situation might have had some affect on the decrease in Japan's current account.

And lets not forget about China too which is one of Japan's largest trade partners and the latest spat between the two governments might have significantly spilled over in to the business and trade arena which might have affected Japan's current account.

The latest spat between the two countries might take some time to resolve as now, for example is the Chinese New Year period and Japan, unfortunately is only ranked 10th in destinations for Chinese tourists when at one time it might been close to being the number one destination for Chinese tourists.

As a result, Japan potentially is going to lose a lot of spending by Chinese tourists, as they have become big spenders as more and more Chinese tourists enter the middle class or even the upper middle class in China and want to travel to overseas places these days.

Have a nice day!