TOKYO -- Price increases for food items as well as utility bills that are closely linked to people's daily lives are set to peak in October in Japan.
Price rises in October are expected for over 6,500 food items, as well as gas bills and fire insurance premiums. As the consumer price index rose in August at a high rate not seen in some 31 years, there is mounting concern over whether household finances and the Japanese economy can endure the autumn price hikes.
Kewpie Corp., which will implement a 2 to 20% price increase for 93 items, including mayonnaise, to be shipped from Oct. 1, released a statement saying, "Under tough circumstances, the company as a whole has worked to streamline operations and curtail expenses, but it is extremely difficult to absorb cost rises through the company's efforts alone. We decided that we have no choice but to alter prices."
NH Foods Ltd., Itoham Foods Inc. and Marudai Food Co. will also raise prices for ham and sausages for industrial and home use from Oct. 1. Meanwhile, the four major beer producers in Japan were quick to announce as early as between April and June that prices will be increased by around 10% for beer, canned shochu and other products from Oct. 1.
Conveyor belt sushi chains Kura Sushi Inc. and Akindo Sushiro Co. have also announced price revisions from Oct. 1, as part of sudden moves within the restaurant industry. The wave of price hikes starting Oct. 1 has been spreading throughout various sectors.
According to a Teikoku Databank Ltd. study targeting 105 food companies, price increases are expected for over 6,500 items in October, a sudden peak compared to earlier periods of 2022, when price rises were seen for up to around 2,500 items at the most per month.
"October is the start of the fiscal year's latter half. It can be thought that one reason behind the October price hike is that it is easy to make adjustments with clients and affiliated parties," a Teikoku Databank representative commented. They added, "There also seems to be the aspect that companies are conscious of the high demand season."
For example, summer is the busy season for beer and beverage manufacturers. If they adjust the period of price rises to October, they can avoid a situation where buyers and consumers stop making purchases during the high demand season. On the other hand, processed food products are popular during the winter. It can be said that by raising prices ahead of the season for hot pot items, companies are trying to cover for rising raw material costs by increasing product prices.
Following the price hike peak in October, price rises would have been implemented for over 20,000 food items since the beginning of this year. "In addition to cooking oil and other ingredients, costs of packaging material, containers, logistics equipment, and other items have been rising. This year, price rises have been occurring for most food items and beverages," said the Teikoku Databank representative. As the average price increase rate has reached 14%, family finances are under a major strain.
Mizuho Research & Technologies Ltd. calculated estimates on the burden imposed on household finances, assuming that the yen will continue to hover in the 145 yen zone against the U.S. dollar. It estimated that each household in Japan will shoulder an increased burden of over 100,000 yen (about $700) per year due to price rises. The institute found that even when factoring in the effects of the government's countermeasures against higher prices, family finances will shoulder an extra 82,000 yen (about $570) per year. Of this increased burden, about half, or 39,000 yen (approx. $270), is the result of increased food prices, while rising energy prices, including electricity and gas bills, as well as gasoline expenses, can be attributed to the estimated extra household finance burden of around 34,000 yen (roughly $240).
Saisuke Sakai, chief economist of Mizuho Research & Technologies, pointed out, "The primary cause of the current hike in prices is the rising costs of daily necessities, including food and energy prices. This is directly leading to an increased burden on family finances." He commented, "It is certain that the tendency to cut down on expenses will grow stronger among consumers, especially low-income individuals who will be careful to avoid nonessential and nonurgent spending."
While households are feeling the pinch from surging prices, domestic wage levels remain stagnant. It seems that rising costs will deter consumer spending, which had finally been showing signs of recovery since the coronavirus outbreak.
(Japanese original by Hiroko Michishita, Hironori Takechi and Yuhi Sugiyama, Business News Department)