Japanese firms finally get pricing power just as economic growth sputters

By Leika Kihara and Kaori Kaneko

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And this is supposed to be good for us.

4 ( +5 / -1 )

gaijintraveller -indeed. Who wouldn`t be thrilled at a prospect of rising prices while wage rises remain mostly stagnant ( with the exception of the large corporates mainly exporters, finance and IT). Apart from some temporary increases due to summer bonuses at selected companies the expected boost in household spending is not going to happen as they become more selective in how they allocate their discretionary funds. But hey, will be interesting to hear the selective statistics and reasoning when Abe increases the tax to 10 % because everything is just dandy , you know.

4 ( +4 / -0 )

The promise of “Abenomics” has been that ultra-loose monetary policy and government spending would push up prices and company profits, in turn boosting wages and spending in a virtuous circle of sustained growth.

The promise of Abenomics has been that of tax hikes, continued spending, and over-intervention in the marketplace.

Abe will find it more difficult to sign off on a planned further increase in the sales tax, seen as key to curbing Japan’s huge public debt.

The key to curbing Japan's public debt is to cut spending , not the imposing of higher taxes on a heavily-taxed population. Japan doesn't need more taxes, or higher taxes. Countries in Europe have even higher taxes, yet, are being crushed by debt.

To boost wages, costs to business have to be reduced, not increased. Abe was smart to cut business taxes, but, the higher costs imposed by the sales tax will significantly cut into whatever tax savings they have received. Weakened demand means lower profits, which makes salary rises hard to offer.

Tax cuts would lead to a virtuous circle of sustained growth. Working people with a higher take home pay are more likely to boost demand, and spur inflation than those whose pay is heavily taxed and stagnant.

Japan has so much potential. A well-educated population with a great work ethic, yet, it is governed by plutocrats and their cronies. PM Abe is squandering an opportunity to turn the economy around.

6 ( +6 / -0 )

GaijinTraveller, it is good because a healthy economy has rising prices due to the economic activity. Not good for individuals, but good overall because it means wages will rise, too.

-7 ( +0 / -7 )

Japan has an ageing population and one of the lowest rates of population growth in the world. The demand for products and services is much reduced The UK has a growing population and an economy that allows the vast number of immigrants able to work legally to settle and make futures for themselves.

Japan is unlikely to fuel growth in a similar fashion so I expect things to get worse here.

6 ( +6 / -0 )

passing on costs.....basic normal people will get shortchanged!!!

3 ( +3 / -0 )

Not good for individuals, but good overall because it means wages will rise, too."

Yeah, but you,d need substantial wage rises to cover the increased prices of everything...not the piddlies most j -businesses offer the resent decision to raise minimum wages by 16 yen per hour..........I mean ffs...160 yen per day if the worker puts in 10 hour days on average....what a joke...yeah , that will surely increase spending and create a virtuous circle.

3 ( +3 / -0 )

A virtuous cycle will only be created once the government isn't sitting in the middle of it trying to be a part of it. Free market capitalism my friends. Bring it to Japan.

0 ( +0 / -0 )

Stagflation by any other name stills sucks.

2 ( +2 / -0 )

Just proves Abenomics is nothing more than BoJ priniting money. 3rd arrow my oshiri.

5 ( +5 / -0 )

Indeed Abe is proving to be as unable to effect real change as all J pols. so print yen and inflate asset prices is all that is really being done.

0 ( +0 / -0 )

Under pressure from Abe, companies have raised wages and bonuses but not enough to offset the tax increase and higher prices. Wages fell 3.8% in real terms in June from a year earlier, the 12th fall in a row.

Wow; this sentence is pure Abe propaganda. Wages actually went up this year; they just didn't go up enough to cover the inflation created by Abe (which itself is mis-represented in the article, as the consumer price index is supposed to include sales taxes, not strip them out). Presenting this as "the 12th fall in a row" is completely disingenuous.

We've seen an awful lot of one-sided, propagandistic articles since the LDP took power that look like they came straight from the desks of loyal Party apparatchiks who don't care in the least for how transparently false their . This one, in which we're meant to cheer on companies with the biggest and greediest price hikes, and in which we're meant to sympathize with the poor beleaguered LDP and BOJ and pretend that their wrongheaded policies aren't slowly pulling the middle class down into poverty, appears to be the most ridiculous one yet.

1 ( +1 / -0 )

I also see a lot of self delusion in the capitalists' thinking. Consumer spending in Japan has become more conservative since the tax hike and prices increases. The steadiness of high end produce sales is old news and not particularly noteworthy because people who buy high end produces can absorb price hikes. Very likely this is dwelt on because of the slump in overall sales. Also, as a consumer of high end products I know you buy them at generous discounts and get fringe benefits. The bottom line is that you can print just so much money to boost inflation before there is blowback. The blowback of reduced overall consumer spending is going to last a long time. It might become permanent, and thus a new norm.

0 ( +0 / -0 )

I think Abe will chicken out of raising the consumption tax to 10%, just as he has chickened out of liberalising the economy. Instead, it's the same old LDP story of spending money like it's going out of fashion and protecting farmers at the cost of their manufacturing base.

The economy cannot revive until companies start raising salaries, but they just won't do it. Manufacturing is in decline in Japan and the service sector is hopelessly inefficient to make up the gap. I'm glad they call it "Abenomics" as the Japanese people might be able to work out who is to blame (but they will still vote for them regardless).

0 ( +0 / -0 )

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