Japan Households Expected to Shell Out Additional ¥145,000 in FY23
6:00 JST, June 6, 2023
Households in Japan will likely fork out an additional ¥145,000 this fiscal year following 12 months of across-the-board price hikes for food and other necessities, according to a private research firm.
Electricity bills are set to soar this month, and further price increases for food and drinks are expected in the coming months. This upward trend is expected to continue through the end of the year at least, further straining household finances.
“I’ve been cutting back on eating out, partly because my kids have started to eat more,” said a 39-year-old homemaker who lives in Sagamihara with her family of four.
The woman said she has been worried by the increased outlay over the past year. Using the Money Forward ME accounting app, she calculated that her family’s food spending had risen by an average of about ¥20,000 per month this year, while utility bills were up by about ¥6,000. In March alone, her household food spending increased by more than ¥50,000.
Hideo Kumano, chief economist at Dai-ichi Life Research Institute Inc., estimates that price hikes will push up average monthly spending for households with two or more persons — excluding rent — by ¥12,116, or 4%, year-on-year in fiscal 2023. Food costs will account for about 60% of the estimated additional outlay of ¥145,393.
Electricity prices are set to rise in many areas from June, with the national average expected to increase by 11%. “Statistical data shows that when electricity bills increase there is increased pressure to economize on food products such as fruits and dairy produce,” Kumano said.
Higher electricity bills would likely lead to a fall in consumption, he added.
Wages fail to catch up
According to Teikoku Databank Ltd., prices for food and beverages began rising in earnest last June. Before that, a few hundred to about 1,000 items were being hiked each month, but in June, more than 2,400 products registered an increase. Hikes accelerated rapidly thereafter, with shoppers having to shell out additional cash for some 7,800 products in October.
However, consumers’ take-home has not kept pace with these price rises. Total cash wages, or nominal wages — which measure average pay — only increased by 1.9% from the previous year, according to the Health, Labor and Welfare Ministry’s 2022 Labor Survey.
Running out of patience
Supermarkets and other retailers are reportedly struggling to cope, too.
“In the past year, it’s been a daily occurrence for manufacturers to ask us to raise prices,” said Tomoya Akatsu, the general manager of company that operates the small supermarket chain Benny Super, which has two outlets in Tokyo. “Price increases affect our customer numbers. We’re running out of patience.”
The operator has been further squeezed by utility costs, which have nearly doubled over the past two years. Starting last autumn, the company has been offsetting its increased administrative expenses by jacking its sticker prices.
According to private research firm Intage Inc., average over-the-counter prices at supermarkets and drugstores rose 49% for aluminum foil and 28% for vegetable oil in April.
If there is a widespread move to pass on the increased cost of electricity, “there could be another rush to raise prices,” a Teikoku Databank official said.
Looking ahead, households are likely to find it increasingly difficult to make ends meet.
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