This spring, prices of various goods will rise in Japan.
The trigger was a gasoline price hike.
The Bank of Japan has been saying that it will conduct monetary easing with the goal of 2% inflation, but until now there have been few price hikes.
Why the rush to raise prices?
The book “物価とは何か(Bukka toha nanika)”(What are prices?”) gives me a clear answer.
Inflation is created by the people!
Deflation in the 2010s
Since Abenomics, the Bank of Japan has increased money, but the public did not expect inflation.
This is because there were few stores to raise prices.
No matter how much Governor Kuroda shouted “2% inflation,” the public would not believe it. Because there were no price hikes in front of them.
In this situation, a tragedy happened at the store that raised the price.
The Tragedy of Torikizoku
Izakaya chain, Torikizoku, raised its prices by 6% in October 2017.
A yakitori (grilled chicken) went from 280 yen to 298 yen, an increase of 18 yen ($0.15).
The 18-yen price increase caused customer turnover and sales to drop.
Prolonged deflation had created “consumers who would not tolerate a price hike”.
Since consumers would not allow price hikes, companies could not raise prices either.
Progression of inflation
However, due to the Ukraine crisis and the weak yen, gasoline prices have increased.
In addition, food prices were also announced to be raised this spring.
Gasoline and food are the top two items that people will feel the price increase.
People who do not tolerate price hikes are now transformed into consumers who accept price hikes.
And, there is another factor driving inflation.
Salaries are also rising
At major companies, wages, which had been kept unchanged for a long time, are about to go up.
Savings are also rising due to the Corona benefit.
With abundant savings and rising wages, people are more comfortable making purchases.
Furthermore, Japanease government relaxed corona regulations.
The economy starts to turn.
Inflation will lead to inflation
What happens when price increases are successfully implemented?
Companies will also find it easier to raise prices further.
When they are able to raise prices, their business performance improves. It becomes easier to raise wages.
I believe that inflation will continue to rise in Japan as it becomes even easier to raise prices with higher salaries.
This is my prediction as an investor.