TOKYO, Feb. 13, 2024—In Niseko, an international ski reosrt buried deep in snow in the frigid large island of Hokkaido, a bow of crab ramen goes for 3,800 yen ($30), and in the Toyosu Senkyaku Banrai alley adjacent to the fish wholesale market, an uni-ikura (sea urchin and salmon eggs) rice bowl deliciously is presented for 18,000 yen ($120). Niseko and Toyosu visitors from overseas are flocking to the restaurants exclaiming something like: ‘Those are cheap, steal prices!’
A Japanese tourist to the alley that had a grand opening on Feb. 1, 2024 were intimidated and opted for a 4,400 yen ($29) uni-maguro (tuna) bowl, the lunch cost four times his weekday meals near his workplace.
Those tourist prices that for the average Japanese are for special occasions quietly and quite rapidly are seeping into local Japanese eateries and groceries. ‘Restaurant prices are soaring and quality and quantities are on the inverse curve,’ lamented one Mr. Suzuki Feb. 12.
Undeniably, torrents of tourists from the world over to popular destinations like Kyoto, where Mr. Suzuki lives, are a key factor behind spiraling prices as the demand-supply equation is strained. In 2023, a total of 25 million tourists visited Japan, up from 3.8 million in 2022, according to Japanese government data. The Japanese government has a target to increase the number to more than 60 million by 2030.
The growth curve is showing no sign of letup despite fewer Chinese tourists during the current Chinese new year because of the flagging Chinese economy. Increasing arrivals are from Asia, Europe, South America and almost every part of the world now. In addition to traditionally popular destinations, including Tokyo, Osaka, Kyoto and other urban areas, tourists are arriving in smaller cities and even villages.
What those foreign tourists experience are refreshing to them but since supply is limited for food, services and accommodations at the time of growing labor shortages in Japan, prices inevitably are going up. Niseko may be an exception as a powder snow ski resort having been known over the past few decades, but visitors are finding new pleasures at dipping in onsen hot springs while watching the snowfall and sheer tranquility of the nature, or climbing mountains and walking old trails.
Had it not been for other factors, that should have been a welcome development: A confluence of the Bank of Japan’s prolonged negative interest rate policy, the yen’s steep slide against the U.S. dollar and other key currencies, widening labor shortages, and the end of Covid restrictions ignited pent-up demand for not only traveling in Japan, by both foreign and domestic tourists, but also for practically any other things.
In short, everything is going up in Japan yet again, making spiraling prices a third wave of inflation. That’s what the Tokyo stock market started mirroring recently, surging for almost unknown reasons.
Will the BOJ, supposedly, the guardians of price stability, intervene and tighten monetary policy? It’s highly questionable for reasons The Prospect explained over time.
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