A new survey by credit research firm, Teikoku Databank Ltd, has reportedly revealed that more than 10,000 food items In Japan will show a 13% price increase this year due to a significant increase in costs of materials and a drop in the value of yen.
According to reports, the Teikoku Databank survey discovered that 105 major food producers had raised prices of 6,285 products by June, with an additional 4,504 products in line to see price hikes starting July.
An increasing number of companies in Japan are selling their products at higher prices due to the rising costs of almost everything ranging from wheat to crude oil as a result of the ongoing Russian invasion of Ukraine and COVID-19 pandemic.
Russia is the world’s top wheat supplier, and the nation, alongside Ukraine, accounts for approximately 30% international grain exports, according to the United States Department of Agriculture.
The average price at which the Japanese farm ministry sells wheat imported from outside to the nation’s milling companies has increased 17.3% this April. The calculation of the selling price is based upon the average price of wheat imported in the previous six months by the government.
Apparently, as the yen has depreciated, it has impacted Japanese companies in several ways, including an increase in import prices and a rise in production costs.
Teikoku Databank stated that previously, to minimize the effect of inflation on consumers the companies introduced a phenomenon of ‘stealth price hike’ or shrinkflation. The concept is implemented by reducing the quantity of the product without changing its original price, or by doing several additions to prices. But now, the conditions are not feasible enough to manage as the increasing prices are beyond the control.
As per the survey, the largest hikes are expected to appear in the prices of alcoholic beverages and drinks, which would go up an average of more than 15% owing to the increasing prices of wheat and plastic bottles for packaging. A price increase will be implemented on more than 80% of the products by July or later.
Rising prices have raised fears of stagflation, which is a phenomenon where an economy witnesses inflation during a period of recession, with the nation’s post COVID-19 recovery likely to grow cold as struggling households curb spending.