From beef bowls to coffee, soaring costs are slashing Japan’s pay staples

TOKYO, October 14 (Reuters) – In 50 years running a coffee shop in Tokyo, Shizuo Mori can’t remember a time when his coffee supplies were so expensive.

The 78-year-old owner of Heckeln, an old-fashioned cafe in Tokyo’s Toranomon business district, says the wholesale price of his main product has jumped 5% in the past three months.

It’s a life-changing experience for a country where slow growth has meant that the prices of many things – including wages – haven’t risen much in decades.

While he has yet to pass the increase on to his customers – coffee in his cramped store costs 400 yen ($ 3.50) a cup – pricing pressures are weighing on his bottom line and he knows his regulars have a low tolerance for such increases.

“Employees don’t get paid much, so everyone will stop drinking if the prices are too high,” said Mori, whose store is famous for its caramel sauce pudding, buttered toast slices and ham and egg sandwiches.

Across Japan, consumers and businesses like Heckeln are faced with the shock of stickers on everything from coffee to beef bowls and other items whose prices barely budged during the country’s decades of deflation.

Core consumer inflation in Japan – which excludes fresh food prices – did not stop falling until August, ending a 12-month deflationary period. Economists and policymakers expect recent price hikes to be reflected in official data in the coming months.

Although inflation in Japan is still modest by global standards, soaring commodity costs have made it nearly impossible for companies in the world’s third-largest economy not to pass on wholesale price increases, which they do. generally resisted out of fear of losing business.

For young Japanese people, many of whom have no memory of significant price hikes, it came as a big surprise, especially as households, workers and businesses are struggling to shake off the economic blow from the pandemic. .

“It’s terrible – incomes haven’t changed. Taxes are going up. People are getting poorer and poorer,” said Yuka Urakawa, 23, who works in the beauty industry and was traveling for a noodle dinner near Yurakucho station in Tokyo.

Like many on social media, she has noticed changes in the prices of beef bowls at restaurant chains like Matsuya Foods.

At most of its outlets, Matsuya (9887.T) stopped selling its 380 yen “premium” beef bowl and started offering regular bowls using cheaper ingredients such as frozen beef and onions. new Chinese for the same price.

Dairy maker Meiji Holdings has raised the prices of its margarines by up to 12.8%, the first increase since 2008, and other food companies have also raised the prices of their major product lines for the first time since. years. Read more

While not necessarily well received by consumers, the trend may be starting to change how the Japanese perceive the prices they pay for basic commodities.

“It feels like prices in Japan have been too low for too long compared to other countries,” said Nozomi Yuasa, 28, who was also dining near Yurakucho station and noticed a rise in prices. price of eggs, dairy products and sweets.

The Bank of Japan’s quarterly “tankan” survey this month showed more companies were facing higher input costs, but also experiencing increased prices they charge customers. Read more

While stimulating stagnant consumer prices has been the central bank’s main objective for years, its strategy has been to do so by fueling demand. Inflation caused by limited supply, on the other hand, is not welcome, especially if it is not accompanied by an increase in wages.

Aware of the sensitivity of households to price increases, some companies are cautious. Aeon Co Ltd, Japan’s largest retailer in terms of sales, said it would not increase the prices of around 3,000 products of its own Topvalu brand this year, instead seeking to keep costs low in part by buying wholesale.

“The recovery in demand in Japan is lagging behind due to the coronavirus,” said Hiroaki Muto, economist at Sumitomo Life Insurance Co.

“If there are price increases, it will lead to lower demand.”

($ 1 = 113,4900 yen)

Reporting by Daniel Leussink and Leika Kihara; Editing by Sam Holmes

Our Standards: The Thomson Reuters Trust Principles.

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