Tag: inflation

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It’s all up, up, up in Japan’s new business year, fanned faster by tourists

TOKYO, April 12, 2024–April 1 is the first day of Japan’s new business year. Young people starting work for the first time and students entering school are welcomed at entrance ceremonies against the backdrop of cherry flower pedals play in the spring breeze. People, fauna and flora and houses all look being uplifted and smiling.

Not this spring.

The weather was nasty. Strong, cold, typhoon-grade powerful winds with occasional downpour, clearly a climate change impact, ruthlessly whipped them all, disabling ceremonies and ubiquitous sakura (cherry) flower parties under the open skies. 

Even more chilling than the frigid spring for people was what economists termed a inflation third wave carrying goods and service prices of all conceivable items, from more than 2,800 groceries, parcel delivery fees, National Health Insurance premiums for people over 75 years, ending of government subsidies for Covid-19 vaccines, NHI premium surcharges to finance proactive child birth programs. Numerous other prices and fees have gone up, such as museum and park admissions.

The hike, which began two years ago, has roughly doubled Japan’s grocery inflation to date and restaurant prices even more, economist said.

The third wave rise coincided with the country’s most popular tourism season, though the fowl weather appeared to have preempted the over-crowing of popular tourist spots such as Kyoto. And yet, the tourist season just started, with more than 20 million Japanese people projected to travel during the late-April to May 5 Golden Week vacation period.

Most starred hotels are filling up and the effect is rippling to so-called business hotels, the accommodations for local traveling workers, where rates have nearly doubled year-on-year.

The bottomline: combined with the yen’s fresh decent against the U.S. dollar and other key currencies, Japan’s CPI inflation is threatening to go sharply higher over the country’s target inflation of 2 percent.

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Japan’s hopeless monetary policy decoupling

TOKYO, Dec. 7, 2023—By now, Japan, the world’s single country that continues zero interest rate policy, should have begun returning to normalcy corresponding to rising prices sparked by the Ukraine-Russia war and a sharp yen devaluation. That expected policy shift is complicated by stabilizing price trends of recent months and the Bank of Japan who is virtually taken hostage by the Ministry of Finance bureaucracy.

Anecdotal evidence, random surveys taken by the media, and retail companies’ share price performances have shown that goods prices, including groceries and nonperishables, jumped 30-40 percent in the latter part of 2023 compared with the spring of 2022 when Russia began invading Ukraine. Japanese government statistics do not back up those street data in a dubious mismatch that raises speculation about government data fabrication, as happened widely a few years ago.

In fact, from milk, gasoline to electric products, in-store prices appear to have been raised by at least 30 percent from 1-1/2 years ago. Hourly labor costs also are going up by more than 10 percent, as 24 percent of employers said they are raising this year-end bonus payments.

On the Diet (parliament) floor, lawmakers have been debating extending financial support to consumers such as a continuation of gasoline subsidies and childcare. PM Fumio Kishida responded by offering to give out more support. 

But government data have been showing only modest rises of products and services while Bank of Japan officials have been repeating that Japan’s prices have yet to enter the sustainable 2-percent a year growth trajectory. BOJ Gov. Ueda Dec. 7 told a parliamentary session that the bank cannot decide when to end its zero-rate policy. Ueda spoke after his deputies, including those sent to the bank from the Ministry of Finance, said they didn’t think Japan’s price trends are extraordinarily high, presumably to quiet Ueda from saying beyond the deputies had said.

For the time being, thanks to a number of reasons, prices seem to be showing some stability but dormant inflationary pressures that are outside government data collection nets are everywhere in Japan. In 2024, those pressures may shoot from the ground like asparagus. Read what they are over the coming months.

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