By Kantaro Komiya, Tetsushi Kajimoto and Daniel Leussink
TOKYO (Reuters) - As war in Ukraine drives up already high input costs, even firms with business models fine-tuned to Japan's deflationary economy are toying with higher prices, testing acceptance by consumers hardened by repeated affirmations of an elusive inflation goal.
High street price rises have broadened as wholesale inflation accelerates at record rates, with increases in the prices of commodities such as oil, for instance, reaching shop shelves in the form of more expensive plastic packaging.
In Japan, the knock-on effect has pushed companies used to nearly two decades of deflation to pass on costs more directly than ever before. On top of changing ingredients or reducing portion sizes, firms have given unusual price boosts to goods such as cooking oil, snacks and popular instant noodle brands.
Such is the inflationary pressure that some firms are moving away business models that assume persistent deflation, such as sticking to particular price points or favouring low-margin domestic fare over higher-quality imports.
"Companies that can add value to their products and services are able to raise prices more sustainably," said analyst Shota Sugihara at market researcher Teikoku Databank.
"It makes sense for companies to shift away from deflationary price-setting behaviour to boost profit and wages."
Conveyer-belt sushi chain Sushiro, famous for making the delicacy more affordable with its 100 yen ($0.85) dishes, has expanded its range of 150 yen and 300 yen offerings.
"Many visitors stick to 100 yen dishes, so we ensure they're happy. But we're also seeing more customers willing to pay for finer sushi," said Koichi Mizutome, chief executive of Sushiro parent Food & Life Companies Ltd.
Small supermarket chain Benny Super is turning its back on a protracted price-cutting war by replacing as many as half of its products with higher-margin alternatives, such as culinary oil from Italy, Greece and New Zealand.
"We'll stock products not offered by other companies, such as rare or small-quantity goods. That's the strategy that works in times of inflation," said Benny Super owner Tomoya Akatsu.
Kobe Bussan Co Ltd has raised prices for most of the roughly 4,000 items it sells at its discount supermarkets.
About a third of those items are made at Kobe Bussan's domestic and overseas factories, giving the company stronger pricing power over those items than items from other food firms.
It also has a line-up of uncommon imported goods such as frozen waffles from Belgium and hummus from Jordan.