The nationwide consumer price index (excluding fresh food) for June, announced by the Ministry of Internal Affairs and Communications on the 21st, rose by 3.3% compared to the same month of the previous year. The ministry estimates that without the government’s measures to curb electricity and gas prices, the rate of increase would have been 4.3%. The restraint measures will cut the subsidy for September by half, and the severe situation for households will continue for a while. Consumers’ declining purchasing power and “price hike fatigue” are also becoming clear.
June was affected by continued price hikes for food and daily necessities, as well as by major electric power companies raising their regulated rates. In particular, food prices, excluding fresh food, increased by 9.2%, unchanged from the previous month. In addition, the general index including fresh food was 3.3%, surpassing the US consumer price index of 3.0% in June and surpassing it for the first time in eight years.
The price increase will continue through August. According to Teikoku Databank, 195 major food companies plan to raise prices in August for 1,048 items (as of July 12). Dairy products such as yogurt and canned goods will go up in price. The yen is depreciating again, and a person in charge of Hagoromo Foods said, “Many of our raw materials are imported.
In addition, 3716 products are already scheduled for October, when the second half of the fiscal year begins, and the pace will exceed last year’s. The government’s measures to curb electricity bills have yet to be decided after October, and there is a risk that overall consumption will cool down if they are reduced or discontinued.
On the other hand, according to the Ministry of Health, Labor and Welfare’s Monthly Labor Survey, real wages in May fell 1.2% year-on-year, taking into account price fluctuations, marking the 14th straight month of decline. Even though big companies have raised wages significantly, it is still negative.
A Teikoku Databank official said, while companies are faced with rising costs such as soaring electricity bills and raw material prices, “Consumption has shrunk due to price hikes, and there are many products that people no longer buy. It’s becoming more difficult to actively pass on costs to prices.”
Shinichi Nishioka, director of the Japan Research Institute’s Macroeconomic Research Center, said, “When wages rise more than prices, households are more tolerant of price hikes.” Depending on the slowdown in consumption, it is likely that it will become even more difficult for companies to pass on costs to prices, which they have not been able to do sufficiently.
As consumers become increasingly tired of price hikes, there is also a trend toward price cuts. In April, Japanese food chain Nakau cut the price of oyakodon by 40 yen. (Tomoko Namiki)
Government measures to curb electricity and gas billsThe government has subsidized 7 yen per kilowatt-hour of electricity usage and 30 yen per cubic meter of gas for bills since February of this year, when soaring prices have increased the burden on household budgets. The amount of support will be halved in September, and the amount after October is undecided. If it were to be discontinued, electricity and gas prices would rise and consumption would drop, while if it were to continue, the financial burden would increase.
2023-07-21 21:00:00
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