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From beef bowls to coffee, cost surge squeezes Japan’s salaryman staples By Reuters


© Reuters. Shizuo Mori (owner of Heckeln coffee shop) pours coffee into cups after using Syphon coffee makers at his Tokyo coffee shop, Tokyo, Japan on October 8, 2021. REUTERS/Kim Kyung-Hoon


Daniel Leussink & Leika Kira

TOKYO, Reuters – Shizuo Mori hasn’t been able to recall a moment when his coffee costs this high in Tokyo for 50 years.

Heckeln, a coffee shop that specializes in old-fashioned Japanese coffee, is owned by the 78 year-old. He claims the wholesale cost for his main product has increased by 5% in three months.

This is an unexpected experience in a country that has experienced low growth over the past decades, which means that wages have not seen much inflation.

However, he hasn’t yet shared the cost increase with his customers. Coffee at his shop is 400yen ($3.50), and price pressures are pinching his profit margins. His regulars don’t like such steep increases.

Mori stated that “salarymen don’t get paid a lot so everybody will stop drinking” and his shop is well-known for its delicious caramel sauce pudding, buttered toast slabs, and ham sandwiches.

Japan’s businesses and consumers are experiencing sticker shock as they face price increases for items such as coffee and beef bowls.

Japan’s core consumer inflation, which excludes fresh foods prices, has stopped falling since August. It snapped a 12 month deflationary streak. Both economists as well as policymakers anticipate that the latest price increases will be reflected in official statistics in the coming months.

Although Japan’s inflation is still modest by global standards, surging raw material costs have made it almost impossible for firms in the world’s third-largest economy not to pass on wholesale price hikes, something they have typically resisted for fear of losing business.

The pandemic has caused a shock among younger Japanese people, who have no memory of large price rises. This is especially true for those working in households and small businesses.

“It is terrible that incomes haven’t changed. The tax burden is increasing. “People are becoming more poor,” Yuka Urakawa (23), a beauty worker, said as she was about to go for a meal near Tokyo’s Yurakucho Station.

As many social media users, she noticed an increase in prices for beef at restaurants like Matsuya Foods.

Matsuya stopped selling the 380 yen premium beef bowl at most outlets and began offering regular bowls made with cheaper ingredients like frozen beef or Chinese spring onions.

Meiji Holdings, a maker of dairy products, has increased the prices for its margarines up to 12.8%. This is the first price increase since 2008. Other food companies also have raised their prices on main product lines, which was the first in many years.

While not necessarily welcomed by consumers, the trend may be starting to nudge the way Japanese perceive the prices they pay for staples

Nozomi Yuasa (28), said that Japan was too expensive for Japan and had noticed an increase in the prices of eggs, milk, and candy.

This month’s “tankan”, the Bank of Japan quarterly business survey, revealed that more businesses are facing rising input costs and higher prices for their customers.

The central bank has had as its main goal for many years to revive stagnant consumer prices. However, their strategy was to stimulate demand. Constrained supply can lead to inflation, which is undesirable, particularly if wages are not increased.

Firms are being mindful of the sensitivity of consumers to price increases and have taken precautions. Aeon Co Ltd Japan’s leading retailer in sales said that they won’t increase prices for about 3,000 Topvalu products. They will instead try to maintain low costs through bulk-buying.

Hiroaki Muto, Sumitomo Life Insurance Co. economist said that Japan is experiencing a slow recovery of its demand.

“Prices will rise, which means there’ll be less demand.”

($1 = 113.4900 yen)