Japan will see another wave of price hikes at the start of the new business year from Saturday as higher raw material costs eat into company margins, dealing yet another blow to consumers already facing inflation rates that have outpaced wage growth.
Over 5,100 food and beverages, ranging from mayonnaise and dairy products to imported wine will be pricier. Research firm Teikoku Databank estimates an average household will have to pay an extra 2,140 yen ($16) a month for foodstuffs.
In a sign that price hikes are broadening, consumers will also be saddled with more expensive services like public transportation and package delivery, while theme parks are raising ticket prices in response to the double whammy of COVID-19 aftershocks and surging costs.
Consumers are already bearing the brunt of inflation that has hit a four-decade high above 4 percent, even though the outcome of annual wage negotiations between labor unions and management for the new fiscal year will likely deliver the largest salary increases in three decades.
The government, for its part, is scrambling to protect consumers by reducing utility bills and handing out cash to low-income households as it looks to head off voter discontent ahead of key local elections in April.
The spread of the avian flu is exacerbating the pain, sending the prices of eggs and products made with them like mayonnaise higher. Condiment makers Kewpie Corp. and Ajinomoto Co. are going ahead with their fourth price hike since July 2021.
Kewpie's 450-gram mayonnaise will be sold at 520 yen, nearly a 10 percent increase on the most recent hike.
Other food items like cheese, yogurt, ham and sausages will see their prices rise by around 30 percent. The price of soy sauce, a daily necessity for many Japanese households, will be some 10 percent higher.
Six major train operators in the Kansai region centering on Osaka, western Japan, are increasing fares in line with those in the Tokyo metropolitan area.
They include Osaka Metro Co., which operates subways in Osaka and nearby areas, along with Hankyu Corp. which links Osaka with Kobe and Kyoto. Passengers will have to pay more for reserved seats on some shinkansen bullet trains running between Osaka and Fukuoka.
After the COVID-19 pandemic boosted demand for courier and delivery services and deepened labor shortages, Yamato Transport Co. and Sagawa Express Co. are raising fees by around 10 percent.
The price hikes coincide with Japan's slow recovery from the COVID-19 pandemic as higher fuel and raw material costs, partly blamed on Russia's war on Ukraine, are further inflated by the yen's precipitous fall. Higher energy costs are particularly painful for the resource-poor nation.
With the lifting of antivirus curbs, Japan has seen a pick-up in demand for services as more people eat out, go on trips and spend more on entertainment. Private consumption, which makes up the bulk of gross domestic product, has remained resilient despite the blow from inflation.
A Teikoku Databank survey targeting around 190 theme parks, zoos and aquariums in Japan found that roughly 40 percent are hiking their ticket prices as of April.
The government, for its part, is implementing steps to mitigate the inflation pain while Prime Minister Fumio Kishida, who has a stated goal of achieving growth and wealth redistribution, is urging companies to reward employees with aggressive wage hikes that can keep pace with inflation, which hit 4.2 percent in January from a year earlier.
The government's new inflation-relief package includes cash handouts for low-income families. while expecting mothers can receive a lump-sum payment of 500,000 yen, up from 420,000 yen at present. Kishida has emphasized making Japan a friendlier child-rearing environment at a time when the country's birthrate has sunk to a historic low.
Pensioners aged 68 and older, meanwhile, will see their national pension benefits increase 1.9 percent in fiscal 2023 from a year earlier, far below the pace of inflation.
Wage growth will be a key determinant of economic expansion after the world's third-largest economy narrowly escaped a recession last year.
Japanese companies have agreed to an average pay hike of 3.76 percent during this year's "shunto" wage negotiations, according to preliminary data from the Japanese Trade Union Confederation, the umbrella group of labor unions. However, a chasm remains between large companies and smaller ones in the pace of pay hikes.
Economists expect food price hikes will continue in the coming months, even as government subsidies to curb utility bills take some pressure off the consumer price index.
Saisuke Sakai, senior economist at Mizuho Research & Technologies, said higher food prices will boost spending by an average 32,000 yen per household in the fiscal year from April.
"Inflation will continue to be a drag on households for a while," he said.
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