(Bloomberg) -- Inflation in Japan is running at 4%, but Taemi Komiyama finds the cost of feeding her family is escalating much faster than that.
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The 35-year-old housewife is paying ¥50,000 ($336) a month for food, up 25% from her budget last year. The prices of staples such as rice, eggs and cabbage have all surged in the past 12 months. She and her husband have stopped eating out to save money and she is considering rejoining the workforce to deal with higher costs. In the meantime, she’s cutting back on fresh produce.
“Fresh vegetables are expensive, so I try to buy frozen ones,” said Komiyama, as she shopped at the discount supermarket OK in the Asakusa neighborhood of Tokyo.
The higher cost of food is forcing Japanese to scrimp and bargain hunt as their purchasing power drops. Last year, Japanese companies increased pay, but not been enough to offset the rise in prices. Real wages in 2024 decreased by 0.3%, according to the Ministry of Health, Labor and Welfare. And there’s little relief in sight. Prices for about 20,000 items in the food sector are predicted to rise this year, far exceeding the number of price increases last year, according to the Teikoku Databank.
Companies are also struggling. Skylark Holdings Co., which operates the family restaurant chain “Gusto”, expects that inflation will push down operating profits by ¥11.2 billion in the current fiscal year. The company estimates that the cost of ingredients will triple to ¥5.1 billion from ¥1.7 billion. Rice in particular is expected to account for a large proportion of this, at ¥2.2 billion.
The outcry among households and companies poses a challenge for Japanese policymakers who had wanted inflation badly for years to revive growth. Voters punished Prime Minister Shigeru Ishiba in last year’s national election over his limited price relief measures, prompting the premier to extend energy subsidies. The Bank of Japan has been far more cautious about raising interest rates than its global peers that aggressively hiked borrowing costs to cool inflation.
Food hits a sore spot for policymakers as the nation increasingly relies on imports, whose prices are dictated by global events like the war in Ukraine, while domestic supplies are affected by factors beyond Tokyo’s control, like climate change. And the cheap yen has made imports far more expensive.