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Inflation pain to continue for Japan consumers in new fiscal year

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The government...is scrambling to protect consumers by reducing utility bills and handing out cash to low-income households...

Stupid strategy. Cushioning working people from inflation will take the pressure off employers to raise wages. May as well ditch the "virtuous cycle" vision.

Pensioners will see their national pension benefits increase... far below the pace of inflation.

That's because the Japanese public meekly submits to government edicts, unlike the French. Watch the French people have comfortable retirements in the future, thanks to their current violent street protests, and watch the Japanese fall further into poverty as they meekly accept the government's pension cuts.  

>  a chasm remains between large companies and smaller ones in the pace of pay hikes.

Watch the small companies start crying about a labor shortage and urging the govt to bring in more third-world labor to do their dirty work.

-11 ( +18 / -29 )

Will our pay go up? I don’t think so.

4 ( +18 / -14 )

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."

And yet the same pensioners will obediently vote in the same LDP government that's giving them this pitiful , third world national pension.

-5 ( +17 / -22 )

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,

Good, this is the key. Inflation is normal and healthy in a functional economy, as long as wages follow. As far as wage rises go, this is a pretty substantial one, and a positive step in an economy that has had little to no wage growth for a very long time.

0 ( +8 / -8 )

Orwellian style capitalism at its finest !!

-7 ( +10 / -17 )

Wow!

Cheese has become a super high luxury food.

2 ( +11 / -9 )

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.

Noticeably missing from the article is the actual inflation rate which was 4.4% (supposedly) as of March 2023.

The "agreed" upon increase is for FULL-TIME salaried workers. Contracted workers, and PT and the rest, will never see an increase in their pay, even though they make up nearly 60% of the total workforce.

The people who need the money the most are getting shoved to the side!

I feel for the people who "retired" as well, taking anywhere from 30% to 50% wage cuts, but continuing to do the EXACT same jobs, just because they hit the official age of 60.

5 ( +16 / -11 )

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.

stupid 1 time cash handouts like this have never worked and never will.

Instead, decrease the sales tax on essential items such as food, clothing, and baby as well as other children necessities.

Decrease the income tax- especially for middle and lower income families as well as families with 2 or more children. The more children, the greater the income tax drop.

To offset inflation, decreasing taxes on struggling families would go a long way. Its not rocket science.

1 ( +9 / -8 )

"" inflation rates that have outpaced wage growth.""

SURE, but wages has always been LOW in Japan, blue color workers have for years been slaved for the profits of the corporations, and yet the government is throwing money at them with subsidies that should be given to the workers and NOT corporate Japan.

5 ( +10 / -5 )

Wages down and prices up but as long as the yen keeps weakening then I’m loving Japan.

Got my savings out a long time ago…

-9 ( +5 / -14 )

I hope the wage will increase, but unfortunately it’s limited to some companies. We need to learn how to survive in this tough situation. Learning from YouTubers who are sharing how to reduce spendings and save money may be one solution to get through.

0 ( +4 / -4 )

three certainties. inflation, death , and star wars spin-offs

0 ( +4 / -4 )

Inflation rate in the 4% range is nothing compared to some other developed countries. But then the interest rate one can get on JYen is also nothing. And wage increases are far behind what they should be.

6 ( +9 / -3 )

Lots of wingeing about agreed wage growth.

What should it be then? 5%? 10%? The economy would be fine soaking that up, you think?

Wage growth this year in the US is around 5.75%. Inflation, 8.5%, just for reference....

-6 ( +1 / -7 )

I bought a pork roast at HEB for 6.50 ,it a boneless roast,I can make lots of delicious meal with it

-9 ( +0 / -9 )

Of course, prices are up when you duplicate your money out of thin air.

-2 ( +1 / -3 )

Awa,we do not worry about Chinese,NK , Russian attacking US

-6 ( +0 / -6 )

Japan is characterized by group thinking.Before nobody wanted to be the seen as the first to increase its prices. Now everyone does it because other do.

These increases obviously are not led by higher raw materials cost and weaker JPY anymore, just by margin increase.

it is a clear example of « be carefull who what’re you wish for ». The BOJ played with fire and this is the result. But Kuroda does not care. He is going to enjoy a cushy retirement and his food bill increasing by 20 %is not really a problem for him!

0 ( +3 / -3 )

if LDP crooks wanted to help to people they will abolish at least VAT for basic food.

but yes they like to talk crap instead.

business as usual.

get less pay more and gambatte neeeeeee

1 ( +5 / -4 )

Learning from YouTubers who are sharing how to reduce spendings and save money may be one solution to get through.

While I applaud the effort, the thought process behind it leaves me wondering why basic ideas about "saving money" and "cutting costs" were not learned when one was younger.

I see far too many Japanese today, that do not think or worry about money.

-2 ( +1 / -3 )

"Inflation will continue to be a drag on households for a while,"

For e v e r.

Inflating is the only way to get rid of the horrific public debt burden accumulated through decades of failed government.

They could cut us all a break by cutting to the chase, and starting over fresh. But as things stand, the public would still vote in incompetents.

So they will need to endure pain, until they understand their mistakes.

-2 ( +5 / -7 )

After two decades of prices barely moving, this is the new normal. Once you've put your prices up once, it's much easier to do it again.

I suspect it may well continue even if the Ukraine war ends and things move away from Covid.

4 ( +4 / -0 )

Never thought of cheese or sausage as gourmet items but they getting into that price range by now.

4 ( +7 / -3 )

@rakuraku

The BOJ played with fire and this is the result. 

No it isn't. The main factors behind Japan's consumer inflation are rising costs of critical imports of energy and food, whose prices have risen due to factors well outside the BOJ's control. In addition, it was the Fed that changed course, not the BOJ, by hiking US rates in a bid to choke the much higher inflation in the US.

4% core inflation isn't bad, all things considered. Japan's real economic problem is its stingy and greedy private-sector employers and their wage-suppression policies even amid record-high profitability.

0 ( +6 / -6 )

Japan finally getting a taste of being the first QE country. Biggest owner of Japanese bonds is the Japanese government, so it's just a matter of when Japan becomes insolvent..

-5 ( +2 / -7 )

The main factors behind Japan's consumer inflation are 

“Inflation is always and everywhere a monetary phenomenon”

(Japan has “producer inflation” too, prices are generally rising.)

4% core inflation isn't bad

Whoah there. 0-1% inflation is not bad, but if consumption tax were hiked by 4% each year, people like you would be moaning about it big time. Me too of course, and rightly so.

Calling it fine and dandy when it’s called inflation, but moaning and groaning about it when it’s called consumption tax, is a whopper of an inconsistency.

1 ( +3 / -2 )

Biggest owner of Japanese bonds is the Japanese government, so it's just a matter of when Japan becomes insolvent..

Whoah there. The central bank that has printed trillions of yen to do so is the biggest holder of public debt, the government is the one that issues the debt to those who would buy it.

Until the central bank stops bankrolling the government, it won’t be insolvent, but the value of the currency issued by the bank could be akin to that issued by R Havenstein

1 ( +3 / -2 )

Meanwhile, I am astounded that we have crazed people defending the LDP in Japan and here. No one in Japan really enjoys the crushing inflation.

-7 ( +6 / -13 )

A very sharp depreciation of the JPY from 110 to 152 over a very short period of time has also contributed a lot to inflation. While part of it may be due to tightening in the US, another part is due to Kuroda repeating again and again that he will not hike rates for the next 2 to 3 years. This forward guidance also explains a large part of the JPY depreciation. So, I think Kuroda carries some responsibility for the current inflation.

His policy also had a lot of very negative side effects:

1)Making it possible for the Japanese government to pile up a huge date that we will have to paid through inflation.

2)Making it possible for zombies' company to survive.

3)Making the gap between the poor and the rich bigger and bigger (rich who have money to invest benefited a lot from stocks appreciation and foreign currency exposure).

And yes as FX gai says inflation is exactly like increasing the VAT the only difference is that it is an undemocratic stealth tax. As Friedman said "inflation is taxation without legislation". On top of that it is a very regressive tax as it weights more on the poor than the riches.

1 ( +3 / -2 )

My message above is an answer to:

@rakuraku

The BOJ played with fire and this is the result. 

No it isn't. The main factors behind Japan's consumer inflation are rising costs of critical imports of energy and food, whose prices have risen due to factors well outside the BOJ's control. In addition, it was the Fed that changed course, not the BOJ, by hiking US rates in a bid to choke the much higher inflation in the US.

4% core inflation isn't bad, all things considered. Japan's real economic problem is its stingy and greedy private-sector employers and their wage-suppression policies even amid record-high profitability.

0 ( +1 / -1 )

The government printed insane amounts of money to fund their adventuristic Covid-19 spending for three years, and now the people are paying the price. The young Japanese should have seen the writing on the wall and made an attempt to stop it, instead of trying to please Japan's Hierarchy-Industrial Complex and Church of Public Health Consciousness.

-3 ( +5 / -8 )

Meanwhile, I am astounded that we have crazed people defending the LDP in Japan and here. No one in Japan really enjoys the crushing inflation.

Crazed is the key word here. That's what you have to be to defend the LDP.

The problem is that, instead of looking at reality, these people prefer looking through ridiculous red-tinted Hinomaru glasses, uttering the same nonsense again and again and again as if this would make their delusions come through, seemingly oblivious to how silly they look to everybody, including average Taro and Naoko who got whatever slightly rosy-tinted glasses they may have worn at one moment being punched out from their faces long time ago...

Reality is bleak, but dealing with it is the only key to survival. As for the others, they'll just go extinct. No biggie. (Darwin Awards come to mind). Let's just insure they won't drag us with them...

I can't recall reading a post I agreed more with than this one. As usual, blue comes out with AMAZING insight. Hat off to you my friend! Excellent Excellent post!

-15 ( +3 / -18 )

@Mandy: Read your comment back to yourself :) Total contradiction.

Lot of whining here about wage inflation here today (or lack thereof) , especially when this is a website basically inhabited by foreigners who don't work in the public sector. Go and ask for a payrise or switch jobs. Tough times for everybody and the cost of living crisis isn't just confined to Japan, it's arguably worse elsewhere.

5 ( +6 / -1 )

@raraku

A very sharp depreciation of the JPY from 110 to 152 over a very short period of time

The contextually accurate phrase is, "A very sharp appreciation of the USD." Most other countries experienced deprecation of their currencies when Powel started hiking, (but have since eased since they too had to hike their rates, a situation thankfully that Japan is not in).

@Mandy

> so it's just a matter of when Japan becomes insolvent..

Japan's debts are in yen, a currency it can print almost at will. Explain how the central bank and govt run out of the money they control and routinely create.

@fxgai

“Inflation is always and everywhere a monetary phenomenon"

Gimme a break. That and much of Friedman's little theories have been disproved by real economic events of the past few decades. I studied it quite a bit of MF in college in the 80s, when it was all the rage. Yuck.

You need to explain how Japan was the world's biggest money printer for decades yet suffered from deflation and near zero inflation. Until, that is, the recent and unprecedented global supply shocks of China's sweeping industrial lockdowns and Putin's energy weaponization. "Monetary"? Seriously?

And even then core inflation in Japan is lower than any of its peers.

0 ( +4 / -4 )

> JeffLeeToday  01:56 pm JST

@raraku

A very sharp depreciation of the JPY from 110 to 152 over a very short period of time

The contextually accurate phrase is, "A very sharp appreciation of the USD." Most other countries experienced deprecation of their currencies when Powel started hiking, (but have since eased since they too had to hike their rates, a situation thankfully that Japan is not in).

JPY basically melted against all major currencies; it was not only an appreciation of the USD even though the USD was the stronger. This is shown by the real effective exchange rate (weighed by the weight of its trading partner currencies) of the JPY which depreciated 17 % from March 2021 to 2022.

Ok let's enjoy the nice weather now!

-4 ( +2 / -6 )

Japan had been in stagnation for 30 years, most people did not have a salary raising, some people having a cut salary to protect their jobs. The 4.2percent hiking of inflation is a very deadly blow to ordinary people lives. Thanks to the LDP!

-5 ( +4 / -9 )

That and much of Friedman's little theories have been disproved by real economic events of the past few decades.

funny you of all money printing supporters would claim that; Friedman was a big proponent of monetary easing in Japan’s case in the late 90’s and early 00’s, the BOJ having hit zero nominal policy rate.

I studied it quite a bit of MF in college in the 80s, when it was all the rage. Yuck. 

Too empirical for you I guess.

0 ( +1 / -1 )

Thanks America….

-2 ( +0 / -2 )

Mmm. @Sanji: Discuss. Miss your point.

2 ( +2 / -0 )

@Yrral I’m surprised you didn’t buy it from the ROC in Wu Han lol! Are you sure it’s pork roast

I bought a pork roast at HEB for 6.50 ,it a boneless roast,I can make lots of delicious meal with it

0 ( +0 / -0 )

For years the government demonised deflation as Japan's greatest enemy. Having vanquished it, why aren't you all celebrating and enjoying inflation?

-1 ( +0 / -1 )

Because it's still mostly cost-push rather than demand-led, and the current level is thus seen as temporary. Further, Japan's private sector is refusing to offer wage hikes in line with the higher living costs.

1 ( +1 / -0 )

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