From noodles to steak, consumers paying more
10/05/2007
In an economy that has struggled for years to escape the grip of deflation, prices of food and other products that directly affect consumers' daily lives have risen recently.
Rising raw material prices, expanding global demand and other factors are behind the trend.
In many industries, the nation's largest manufacturers have taken the lead, convinced that their brand names will pull them through and apparently with no other choice but to pass on the rising costs to consumers, experts say.
"Companies that have confidence in their brand values are spearheading price hikes," an official in the retailing industry said.
The rise in wheat prices is largely behind the spate of price hikes for instant noodles, spaghetti and curry roux.
Nissin Food Products Co., the nation's largest instant noodle manufacturer, announced on Sept. 5 it will raise prices by about 10 percent in January. Its three smaller rivals have followed suit.
On Monday, the agriculture ministry raised the sales price of imported wheat by 10 percent to reflect the surge in global prices.
Wheat is trading on international markets at around double the price of the previous year. And Japan depends on imports for nearly 90 percent of its wheat consumption.
In Australia, a key supplier, the wheat harvest has shrunk by about 60 percent from the previous year due to a drought that experts say hits only once every 100 years.
In Canada, acreage has decreased because farmers switched to corn and rapeseed, demand for which is growing as ingredients of environmentally friendly biofuel.
It's not only prices of ingredients that are forcing consumers in Japan to spend more. The record high crude oil prices have jacked up costs for packing materials and transportation.
Meat prices have risen due in part to increased consumption in China and other fast-growing economies, where consumers' dietary patterns have become Westernized. Rising feed prices have added to the cost of meat.
Fish has increased in popularity in the United States and Europe, with demand rising for such varieties as tuna and bonito. That translates into higher prices around the world.
Companies have also reduced volumes of chocolate products and potato chips while keeping the same prices.
When Japan's economy was in the doldrums and commodity prices continued to fall, manufacturers cut costs through restructuring to lower prices.
"With little room left for trimming personnel and other expenses, the companies have apparently concluded that the stage has been set for price increases because the economic recovery has more or less stabilized personal consumption," said Katsuhiro Oshima, an economist at the Mitsubishi Research Institute.
The effect on consumers will depend on how much retailers will reflect the manufacturers' hikes in shipment prices in price tags.
Government statistics show that prices have been rising for a wide range of products.
The price of mayonnaise, for example, increased 8.5 percent in June and 11.9 percent in July from a year earlier, according to consumer price statistics compiled by the internal affairs ministry.
A 10-percent price hike was announced by the manufacturers in those two months.
The consumer price index, excluding volatile perishables, is calculated based on prices of about 520 product items.
In recent months, prices for more than half of these items have increased from a year earlier, compared with only about 24 percent of the items in 2002.(IHT/Asahi: October 5,2007)
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