Surging prices: the umaibo index

[thomas]

Over the past few weeks, rising consumer prices have been a common topic on Japanese media. No price hike has startled the audience more than the 2-yen hike of umaibō (うまい棒), a famous corn puff snack that was launched in 1979 and had been sold for 10 yen ever since. It comes in three flavours: corn potage, mentaiko (spicy cod roe), and cheese. Many see umaibō as an economic indicator of Japan Inc.'s performance: in 2007, umaibō snacks were reduced in size and weight, shaving off 1 gramme.

The crunchy corn snack's producer, Yaokin, blamed the rising price of corn imported from the US for the hike, the first since Umaibo went on sale in 1979. Although the figures involved are tiny, the increase – less than 2c – is symbolically significant in "inflation-resistant" Japan, where firms have been reluctant to pass rising raw material costs on to consumers. Noriko Eda, a 59-year-old Tokyo resident, said she was "surprised" by the news. "Umaibo have been the same price for so long, so a ¥2 increase is a big deal." [...] Celebrity fans mourned the looming demise of the ¥10 price tag and, possibly, the loss of Umaibo's status as Japan's "national snack". "We're witnessing a turning point in history," tweeted rock musician Atsushi Osawa, whose band, Uchikubi Gokumon Doukoukai, referenced the snack and its "miracle" price in a 2010 song. "The price has started to diverge from the lyrics," he said.

Japan’s favourite snack falls victim to global inflation with first-ever price hike

Umaibo, a crunchy corn snack that means ‘delicious stick’, increases in price from ¥10 to ¥12 – the first rise in the face of higher import costs

www.theguardian.com

However, umaibō are not the only consumables that will see price increases: also a wide range of items essential to daily life, from seasonings and staple foods to commodities such as toilet paper and utilities including electricity and natural gas. And let's not forget petrol, currently at a staggering 166 JPY per litre.

Among the items for which prices will increase in February are regulars on the kitchen table: soy sauce, mayonnaise, pasta, udon noodles, ham and sausages. Electricity and gas rates will also lurch upward. A combination of factors is behind the rise in prices. Demand for goods is heightening worldwide due to China's economic expansion, along with the economic recovery in the United States and in many European countries after languishing in a pandemic-induced downturn. But supply chains have been unable to catch up with demand because of a poor harvest, a labor crunch and a shortfall of shipping containers brought on by the ongoing global health crisis. Crude oil prices have been trending upward, worsening the problem.

Surging prices to pinch consumers, derail economic recovery hopes | The Asahi Shimbun: Breaking News, Japan News and Analysis

 

[Lothor]

I just don't understand how the official inflation rate can still be virtually zero.

 

[thomas]

If I am interpreting the CPI chart correctly, it's 0.8% p.a. (2021) and 0.1% for December 2021:

Statistics Bureau Home Page/Consumer Price Index Latest Monthly Results

The Statistics Bureau and the Director-General for Policy Planning of Japan play the central role in the official statistical system in producing and disseminating basic official statistics,and coordinating statistical work under the Statistics Act and other legislation.

www.stat.go.jp

Given the umaibo effect, it has to go up a few notches in Q1.

 

[musicisgood]

prices went up ten yen on most food products.

 

[mdchachi]

I think our proxy in America is the Big Mac.

 

[Grandpa Frank]

My wife complains about grocery costs and I notice the rising cost of heating oil the most. I'm glad our tiny house only averages about $800US a year to heat.

 

[JPeters]

My morning Nihon Nikkei Shimbun this morning had an interesting front page story about the depreciation of the yen and the reason it was of interest to me is because I had expected more depreciation than we have seen and a lot sooner.

Frankly, I find it rather mysterious that the yen has been hanging in there like it has over the past few years.

I went looking for that article online and the best I could find if you don't have an account was this page:

円安の重圧、暮らしに　10年で婦人服の価格13%上昇 - 日本経済新聞

「円安は日本経済にプラス」といわれてきた構図が変わりつつある。スマートフォンや家電、衣料品など身の回りの製品の輸入依存度が高まり、円安による物価高が家計を圧迫しやすくなった。半面、製造業の海外移転で円安が輸出を押し上げる力は弱まった。貿易で稼いで国の富を蓄積する経済の循環が成り立ちにくくなり、円の実力を映す理論値も切り下がっている。日本経済新聞社と日本経済研究センターが算出する円の理論値「日経

www.nikkei.com

I also want to add another link to this post of an interesting Investopedia page that is rather well written that explains contagion:

Understanding Financial Contagion: Spread of Economic Crises

Learn how financial contagion spreads economic crises globally, affecting markets and economies at domestic and international levels, and its historical examples.

www.investopedia.com

One extra thought comes to mind, but it only just came back to me as I was typing this. I very recently read an article about electricity rate hikes in Japan and the reasons for those rate hikes and some explanation about a mechanism that allows the power companies to raise rates based on energy prices and these rate hikes fall outside of normal government regulations related to rate hikes. The author(s) cited a TEPCO rate hike comparing a year-on-year hike and it was quite a significant hike and it adds to the mystery about all this great economic news we are continually fed by some government agency and seems to be indicating that inflation is under control and all is happy-happy-happy. I'm going to stand in line behind Lothor when he goes to the "Please Explain" window at METI in Kasumigaseki and asks if what he is reading and hearing is, in fact, the truth.

I mean, something just doesn't feel right.

I wouldn't be a bit surprised if we suddenly see a scandal sheet in about ten years that some team of statistics-gathering-humans messed up and the economy actually was doing much worse than they thought back in 2021 and 2022, BUT now all is fine so no worries at this time in 2031. We'll just take those humans to court for a ten-year court battle and then throw it out because the judges keep falling asleep.

>>>NOTE: I'll try to find that electricity rate hike story, but if you find it first, please post a link. I don't even remember what language it was in. Sorry. I'm rather sure I read it within about the past week.<<<

 

[JPeters]

Oh my goodness, if one has concerns about prices then you best pay heed to the U.S. White House request that Japan consider giving up some of their import contracts for LNG and allowing the shipments to go to the European markets.

In addition, just the request alone is going to bring in a negative Nikkei reaction.

I'll give the U.S. administration credit for the idea, but this is one I think they should have kept inside the diplomatic pouch a little bit longer. On that point I think we have a failure in management at a very, very high level. Unless, of course, their intel folks are seeing something on the military front that hasn't been given out to the public, yet. Like not only the blood supplies showing up, but the laundry trucks and such cleaning facilities right behind them. That is a must for keeping troops clean and keeping hospital bed stuff clean, and a sure thing the intel folks have been watching for.

I think my worry level just went up a notch. Maybe two notches.