Consumers are having to pay more for food Photo: AFP/File
business

Should we really worry about inflation?

45 Comments
By Ali BEKHTAOUI

Whether it is the heating bill, pump prices or making the weekly run to the supermarket, consumers are having to dig deeper and deeper into family budgets.

Inflation is complicating the recovery of individual consumers from the pandemic and putting the recovery of the global economy at risk.

What does the data say?

Inflation figures have been rising for months. In the United States, government data released this week showed consumer prices rose by five percent on an annual basis in October, the highest since 1990.

In the Eurozone, consumer prices were up 4.1 percent, the highest in 13 years. In Britain, the increase was 4.2 percent.

In all three, inflation is running at more than double the targets set by their central banks.

Elsewhere, inflation is also running hot. In Russia it is 8.1 percent, in Brazil it has hit almost 11 percent, and in Turkey it is nearly 20 percent.

Behind these abstract numbers is the concrete reality of the skyrocketing cost of filling up the gas tank, higher prices for meat and other basic foodstuffs.

In the United States, many food companies are cutting the size of packages to avoid raising prices, a practice called shrinkflation. Restaurant owners have told AFP they have begun to remove products which have become too expensive from their menus, such as bottled water or crab cakes.

Why are prices rising?

After stalling in 2020, the motor of the global economy is spluttering back to life this year. This rebound, plus shifts in consumption away from services to goods by households, means a boom in demand that has outstripped supply, which in some cases is still being hobbled by the pandemic.

This has pushed up prices of many raw materials, first and foremost crude oil, but copper and wood as well.

Certain manufacturing sectors have been hit by a lack of semiconductors or computer chips, in particular the auto and mobile phone industries.

Global transport networks have also snarled up. Some ports have become clogged because of a lack of workers to offload cargo while in Britain there is an acute lack of truck drivers. Freight prices have skyrocketed.

Transitory, really ?

The refrain from central bankers about inflation has been unchanging: it is transitory as it is the result of the low point of comparison from last year and is being caused short-term supply problems that will resolve themselves.

The argument has begun to wear thin as the months have passed.

"It is now clear that this process will take longer than initially expected, and the inflation overshoot will likely get worse before it gets better," said analysts at investment bank Goldman Sachs in a note to clients.

They believe inflation will begin to wind down only in the middle of next year.

A sign of the growing concern is that Google searches for the word "inflation" have hit their highest levels in the United States and Europe since tracking began in 2004.

This is one of the worries of central bankers: that a sentiment of persistent inflation prompts widespread demands for wage hikes that companies have to pass on as higher prices, thus triggering a vicious spiral of wage and price hikes.

In the United States, the situation is complicated by the fact that there is actually a shortage of workers in many sectors, with many companies raising wages to secure staff and passing higher costs onto customers.

Companies are "expected to bid up the price of scarce labour going forward," said Jacob Kirkegaard, a senior fellow at the Peterson Institute for International Economics in Washington.

Why is this a minefield?

Usually, central banks would raise interest rates to tamp down price increases.

But but given that the global economy is still suffering from the pandemic and there are signs that the recovery underway is already weakening, policymakers are worried about the risk they could kill it off.

Several central banks have nevertheless already raised rates due to inflation pressures, including in Mexico, Brazil and Russia.

The head of the U.S. Federal Reserve, Jerome Powell, said earlier this week when he was renominated to the post that we would act to "prevent higher inflation from becoming entrenched."

© 2021 AFP

©2021 GPlusMedia Inc.


45 Comments
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"Should we really worry about inflation?"

You should. Especially if your average employee's salary after tax is ¥130,000.

22 ( +24 / -2 )

Should we really worry about inflation?

Perhaps outside Japan. Not so much inside Japan, for the time being.

https://www.stat.go.jp/english/data/cpi/1581-z.html

-20 ( +3 / -23 )

Of course not. Worrying doesn’t achieve anything. That’s all I hear in the papers these days. Worry this, fear that, my advice is get a grip.

-9 ( +8 / -17 )

I wish it was possible to buy fruit and vegetables loose like the photo. Everything in Japan is pre packaged meaning you buy more than needed. Inflation right there.

10 ( +16 / -6 )

Wages and social security never rise enough when inflation goes up, so people become poorer, the less well off being hit the hardest as they have little spare cash and small increases can break their financial viability. Then interest rates are raised. But this doesn't really work. What it does do is increase loan repayment costs (often affecting people who are already on the edge of financial survival) and mortgages, breaking economic viability further up the economic pyramid. Then folk start to vote against sitting regimes. High inflation causes political instability, and there is already far too much of that courtesy of the Covid response, lockdowns and the suppression of globalised markets and labour resources. The numbers in the piece are not accurate for specific day-to-day purchases, so the real impact for the majority is already much worse. Supermarket prices in the UK for some items have increased by 50% or more, and they are going up in 10% jumps. This is not transitory or temporary. Government policies will continue to raise prices, limit supplies, suppress economies and increase inflation as we move further away from an optimised, globalised system. MMT cash cannot cushion the blow. There will be trouble ahead as political instability inevitably leads to civil and regional unrest, conflict and war. Buckle up everyone. The good times are over courtesy of those now back in charge.

Japan will buck the trend to some extent, so it will be a better place to be than many nations, but it will not be immune.

13 ( +13 / -0 )

Yes we should. There is 0% interest on savings in Japan and salaries are stagnant. Simply we all get poorer.

21 ( +22 / -1 )

Our local store has packed fruit and veg but also single ones. Price of imports are up 38% and will raise the domestic prices.

9 ( +11 / -2 )

thought it was deflation the powers that be warned us about..

3 ( +6 / -3 )

Yes we should. There is 0% interest on savings in Japan and salaries are stagnant. Simply we all get poorer.

In the words of Leonard Cohen- That's how it goes...everybody knows

2 ( +7 / -5 )

Agreed @factchecker 8:07am: “I wish it was possible to buy fruit & vegetables loose like the photo.” in inner-city Japan. (Appears to be another, slightly-blurred ‘stock image’ from another country to fit the content & context of the story.)

Everything in Japan is pre packaged meaning you buy more than needed. Inflation right there.” -

Perhaps it’s the incessant, over-packaging of almost every-single-item on shelves, while to protect and allegedly insure ‘freshness’, may also be contributing to the inflated costs, here in Japan?

4 ( +7 / -3 )

Should we start contemplating the idea of conceptualizing the concept of starting to worry?

4 ( +4 / -0 )

Yes. Hands up everyone whose wages/rates/pension have not gone up.

15 ( +15 / -0 )

As long as it is controlled, no.

Inflation has occurred for decades

-7 ( +0 / -7 )

We need to start growing our own and I mean fruit and vegetables, not that…

0 ( +2 / -2 )

People questioning whether commoners should worry about inflation obviously have never felt the pinch of inflation.

7 ( +7 / -0 )

The article does not mention Japan. The photo is probably of something like Parkway Greens UK.

5 ( +7 / -2 )

In the United States, many food companies are cutting the size of packages to avoid raising prices

Funny, this writer writes this as if it's something new. There could be a whole story on this one topic going back a couple of decades. It's more obvious at places like Mr. Donut, but packaged food and goods can get away with it much easier.

4 ( +4 / -0 )

That meme: "this is fine", yeah, you know the one.

3 ( +3 / -0 )

Should we really worry about inflation?

Perhaps outside Japan. Not so much inside Japan, for the time being."

Really.....been to the gas station and supermarket lately?

9 ( +9 / -0 )

Beside gas prices you are hardly experience any inflation unless you have line one superstore around your home.

Prices in my local yaoya didn't change or even decreased however I might not be spoiled like you and eat caviar everyday.

-4 ( +0 / -4 )

Yes we should. There is 0% interest on savings in Japan and salaries are stagnant. Simply we all get poorer.

ACTUALLY, it's 0.03% interest. I just had to do it, sorry. lol

3 ( +3 / -0 )

I noticed natto and milk are up 10%. Some shops don't have US imports anymore

Why wouldn't a consumer worry about inflation though? Weird to suggest otherwise, completely obvious why

9 ( +9 / -0 )

I can't really say I've noticed any price increases.....petrol has, but I don't have a car.

-3 ( +1 / -4 )

Why wouldn't a consumer worry about inflation though? Weird to suggest otherwise, completely obvious why

We know why leftists are saying inflation isn't a big deal.

Earlier this year inflation was bad, but Biden was going to fix it.

Now that he can't fix it, they're saying "Well, maybe inflation isn't so bad." A cover job, plain and simple.

4 ( +7 / -3 )

many food companies are cutting the size of packages to avoid raising prices, a practice called shrinkflation.

well i know about better word.

its greed and cheating of consumer.

when customer is looking for food buying always,price about same but size "shrinked" down....

same thing about taste of food when makers wants to "fit customers taste" =means using cheaper ingredients to increase own profit.

its pathetic to see "excuses" for rising of prices for food because of higher petrol costs,bad summer weather or even covid ...in fact al is about greed and profit of corporations.if say petrol prices went down-prices for food remained same...

buy food from local small maker,east locally produced fruits and veggies,support local farmers.

japanese reality is get paid about same money for decades,pay more taxes and VAT ,pay more for "shrinked" food full of chemicals and yes-in reality get much less on hand for normal life.

5 ( +6 / -1 )

”Thanks!” for the speculation on the source of the photo @zichi 9:08am. In regards to your 1st observation and, with all due respect, this media is “Japan Today” and one poster @7:28am since started referring to similar “inflation” issues “in Japan”. Therefore, seems only fair, once a comment is ‘grandfathered in’, (let’s say for more that :15?), then discussions can follow that ‘thread’ unless, of course, courteously redirected “back on topic, please”, in moderation, of course; )

- @zichi 09:08am: “The article does not mention Japan. The photo is probably of something like Parkway Greens UK.” -

-2 ( +0 / -2 )

snowymountainhell

the article on inflation does not mention Japan, where there is no inflation. The forum might be called Japan Today, and before your arrival, the articles were mostly about Japan but then more American ones were published probably because of the clicks. Sometimes wonder if it is more America Today.

But discussion on Japan was added which includes me at @8:22am. I have no problem with that.

But you posted at @8:35am "Appears to be another, slightly-blurred ‘stock image’ from another country to fit the content & context of the story."

I wondered why you would not expect an article on foreign countries to also have a photo from one of them and not from Japan, which isn't mentioned in the article. The operative word is "another country".

I didn't speculate about the photo. I researched it to discover the possible origins. Something I do frequently. One useful tool is Google Lens or check the stock photos of the publisher.

The photo is likely a farmers market that sells individual items, as do all the farmer's markets in Japan also do.

Parkway Green UK is such a place.

Now I feel deflated.

1 ( +2 / -1 )

snowmountianhell

if you really want to know all the details of the article photo I will give them to you.

"A stallholder restocks peppers on a display of vegetables outside a shop in Walthamstow in east London on November 21, 2021. - British annual inflation surged close to a ten-year peak in October partly on the back of higher household energy costs, official data showed last week. The annual rate jumped to 4.2 percent, hitting the highest level since November 2011, the Office for National Statistics said in a statement. (Photo by Tolga Akmen / AFP)"

1 ( +2 / -1 )

In the United States, government data released this week showed consumer prices rose by five percent on an annual basis in October, the highest since 1990.

Complicated? Here I'll **** it down for you.. Inflation is officially here and going to get much worse.

1 ( +1 / -0 )

No, of course corona is the neck breaker, you’ll see soon if you still don’t believe it. But if you have two necks, then this inflation comes into action to give you the rest anyway.

0 ( +0 / -0 )

Foreigners get the short end of the stick in terms of the relative inflation rate in Japan compared to their home countries, so yeah I am worried about it.

In Canada, where I'm from, the inflation rate right now is close to 5%, which is very high. A lot of countries in Europe are the same, and the US is even a bit higher.

That sucks for them. Everything is getting more expensive, as it has been for years, but at a much higher rate than usual.

In Japan, in contrast, there is almost no inflation right now, nor has there been any for about 30 years.

On the one hand, the good side of this is that prices for things haven't really increased much here. Housing is still affordable, food costs about the same now as it did when I first got her twenty years ago, etc etc. In contrast in Canada the price of everything now is way higher than it used to be, which sucks.

On the other hand though, the downside is that my income in Japan (and most people's) is pretty much stagnant. My only wage increases have come about due to me being promoted and not due to my employer raising their wage rates.

Now so long as I'm content to stay in Japan that isn't too much of a problem since the cost of most things isn't going up either. But its getting harder and harder for me to save up money to potentially move back to Canada someday (not sure if I will, but I might) because the amount of stuff in Canada my Japanese income (and hence my savings) will buy is going down year after year after year. If I had been making my current salary in Yen 20 years ago, I would have easily been able to save up for a nice downpayment on a Canadian house after just a few years. Making the same income today though makes it almost impossible for me to save up for a Canadian house. Which sucks.

-1 ( +1 / -2 )

rainyday, have you not been shopping over the past year?? Prices on many, many things have been rising. Indeed, some prices have been stable (due to "repackaging"), but hold on to your touque because you'll be shocked.

0 ( +1 / -1 )

rainyday, have you not been shopping over the past year?? Prices on many, many things have been rising. Indeed, some prices have been stable (due to "repackaging"), but hold on to your touque because you'll be shocked.

I go shopping pretty much everyday. There have been a few price rises on some items, (and decreases on others) but not enough to make a noticable impact on how much I spend, and nowhere near as much as what is going on in Canada or the US. I'm aware of the practice of putting smaller quantities of something into a package to hide a de facto price increase (the coffee I buy now comes with less in it for the same price I've noticed) but its nowhere near at the level it is elsewhere.

The aggregate data on consumer prices in Japan is really clear on this, Japan is NOT experiencing inflation in anywhere near the same way other countries are. For most of the past year prices on consumer goods have actually been decreasing rather than increasing and modest increases in the past two months have been trivial in comparison to that in other countries:

https://tradingeconomics.com/japan/inflation-cpi

0 ( +1 / -1 )

Naaah. Just a number. As long as you know how to manage your finances, you'll be fine.

-1 ( +1 / -2 )

Should we really worry about being paid less for the same amount of work?*

1 ( +1 / -0 )

What do you expect, the US has printed more $$$ since the pandemic than last two decades, and this includes the mega "incentives" after the 2008 crisis

0 ( +0 / -0 )

Yes.

-2 ( +0 / -2 )

Absolutely! As the price of oil rises, the cost of ground transportation rises which will reflect in the prices of goods. Some of the price inflation is masked as food producers repackage their products (shrink-flation). Some retailers will eat the increases by cutting into their profit margins, but in time they will raise prices or reduce discounts/sales incentives. Price increases of imported goods are easier to spot.

It's there if you are paying attention.

2 ( +2 / -0 )

I guess if your wages never change in Japan it comes down to 'why worry?' shoganai attitude

If they electrified the highways to lead to the development of transport trucks moving freight without oil then there wouldn't be any international affect on transportation prices, which in effect would stabilize prices. That would in turn spur more green energy initiatives along the roads and make the roads a part of the grid.

Then shipping food or any good would only entail local pricing

0 ( +0 / -0 )

People need to understand what inflation is a bit more. It's an entirely man-made concept which can either be solved or not by practical measures. If wages and prices both rise then relatively there is no inflation and nothing to even consider. If wages don't go up then you're being screwed by someone. If there is inflation because of a genuine scarcity or shortage of something then you need to worry about that, not a random series of arbitrary figures on a price tag.

0 ( +0 / -0 )

Main reason why perhaps inflation isn't going away soon,

shifts in consumption away from services to goods by households

With money supply increasing (via subsidies) or staying relatively the same, price for goods is naturally going to go up. What could offset this demand in the service sector (Flights, live events, travel)? Short term or long term?

0 ( +0 / -0 )

Inflation is going to happen from time to time. You can try worrying about it to see if it helps, but careful planning and investing (if you can) is probably a better strategy.

0 ( +0 / -0 )

Eat, drink, and be merry, for tomorrow we'll be too broke! Things sure have taken a sharp dive over the last 12 months...

0 ( +0 / -0 )

"If they electrified the highways to lead to the development of transport trucks moving freight without oil then there wouldn't be any international affect on transportation prices,..."

Just wave a magic wand to make that happen then. And where would the electricity needed to make such a concept possible come from? Pixie dust?

0 ( +0 / -0 )

A late** reply @zichi 12:15pm, **but “Thanks!*” for your research and, always, very informative posts.

@zichi Nov. 26 12:15pm: snowmountianhell, if you really want to know all the details of the article photo I will give them to you. “A stallholder restocks peppers on a display of vegetables outside a shop in Walthamstow in east London on November 21, 2021. - British annual inflation surged close to a ten-year peak in October partly on the back of higher household energy costs, official data showed last week. The annual rate jumped to 4.2 percent, hitting the highest level since November 2011, the Office for National Statistics said in a statement. (Photo by Tolga Akmen / AFP)"

(*****It’s been a busy “holiday” weekend) - Regards.

-1 ( +0 / -1 )

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