Many firms reluctant to hike prices

Price hikes for groceries and consumer products in Japan are retreating from a flood to a trickle following the recent sharp pullback in oil prices and worries that the deepening global financial crisis will hit consumer sentiment. Late this month, prices for such food items as flour and Ajinomoto Co's namesake seasoning product are slated to go up, while gasoline will become more affordable.

Some retailers, including Aeon Co, are slashing the prices of imported products sold at their outlets in response to the yen's recent appreciation against other currencies.

Takeshi Minami, economist at the Norinchukin Research Institute, points out that the barrage of price hikes in Japan this year, which stemmed from soaring prices of crude oil and raw materials, appears to have peaked out.

Meanwhile, companies such as major bakery Yamazaki Baking Co have decided to keep prices unchanged despite the higher cost of flour and other ingredients, due to worries that increased prices could deter consumers.

Duskin Co is taking the unusual step of slashing both the prices and the size of the doughnuts sold at its "mister Donut" doughnut shops.

At the same time, some companies have not yet passed on the higher costs of raw materials and ingredients.

Meanwhile, uncertainty is increasing about consumption, following recent sharp falls in stock prices.

Hideo Kumano, chief economist of the Dai-ichi Life Research Institute, says that November may be the last chance for Japanese companies to hike prices for their products.

© JCN