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

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TOKYO (Businesshala) – In 50 years running a cafe in Tokyo, Shizuo Mori can’t remember a time when his coffee supply was so high.

Shizuo Mori, owner of Hakelan Coffee Shop, pours coffee into a cup after making coffee with a siphon coffee maker at his shop in Tokyo, Japan, October 8, 2021. Businesshala/Kim Kyung-hoon

The 78-year-old, who owns Hekelan, an old-school coffee shop in Tokyo’s Toranomon business district, says the wholesale cost of his staple product has risen 5% in the past three months.

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It’s a shocking experience for a country where weak growth means the prices of many things – including wages – haven’t risen much in decades.

Although they have yet to pass a hike to their customers – coffee at their cramped shop costs 400 yen ($3.50) a cup – price pressure is squeezing their bottom line and they know their regulars like this. Have low tolerance for growth.

“Salaried people don’t get paid very much, so everyone will stop drinking when prices are too high,” said Mori, whose shop is famous for caramel sauce puddings, slabs of buttery toast, and ham and egg sandwiches. Is.

Across Japan, consumers and businesses like Hakelan are facing sticker shock for everything from coffee, beef bowls and other items whose prices have barely risen during the country’s decades of deflation.

Japan’s core consumer inflation – which does not include fresh food prices – only stopped falling in August, breaking a 12-month deflationary period. Economists and policymakers expect official data to reflect recent price hikes in the coming months.

Although Japan’s inflation is still modest by global standards, rising raw material costs here have made it nearly impossible for firms in the world’s third-largest economy not to pass up wholesale price increases, something they feared losing business. is generally opposed.

For young Japanese, many have no memory of the significant price hike, which has come as a harsh surprise, especially as households, workers and businesses struggle to overcome the economic hit from the pandemic. Is.

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

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

At most of its outlets, Matsuya has stopped selling its 380 yen “premium” beef bowl and started offering regular bowls using cheaper ingredients like frozen beef and Chinese spring onions at similar prices.

Dairy product 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 prices on their main product lines for the first time in years.

While not necessarily welcomed by consumers, this trend may be beginning to undermine the way Japanese people perceive the prices they pay for staples here.

“It seems that Japan’s prices were very cheap compared to other countries for a very long time,” said 28-year-old Nozomi Yusa, who was also having dinner near Yurakucho Station and noted the price of eggs, dairy and candy. has seen an increase.

This month the Bank of Japan’s quarterly “Tanken” business survey looks at more companies facing higher input costs, but also the fees they charge customers.

While reviving stable consumer prices has been the central bank’s main objective for years, its strategy has been to do so by boosting demand. On the other hand, inflation caused by limited supply is undesirable, especially if it is not matched by increased wages.

Aware of the sensitivity of households to price hikes, some companies are acting cautiously. Aeon Co Ltd, Japan’s largest retailer by sales, said it would not raise prices on nearly 3,000 of its brand Topvalu products this year, but would seek to keep costs down through bulk-buying.

“There is a lack of demand in Japan because of the coronavirus,” said Hiroki Muto, economist at Sumitomo Life Insurance Company.

“If the price goes up, it will result in less demand.”

($1 = 113.4900 yen)

Reporting by Daniel Lusink and Leica Kihara; Editing by Sam Holmes

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