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From meat bowls to coffee, rising costs squeeze staples out of Japan’s wage earners

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TOKYO – In 50 years running a cafe in Tokyo, Shizuo Mori can’t remember a time when his coffee supplies cost so much.

The 78-year-old, owner of Heckeln, an old-school coffee shop in Tokyo’s Toranomon shopping district, says the wholesale cost of his main product has risen 5% in the past three months.

That’s a shocking experience for a country where weak growth has meant that the prices of many things, including wages, haven’t risen much in decades.

While he has not yet passed on the increase to his customers (coffee in his small shop costs 400 yen ($ 3.50) a cup), price pressures are squeezing his results, and he knows that his repeat customers have little tolerance for it. such increases.

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“Employees are not paid much, so everyone will stop drinking if the prices are too high,” said Mori, whose store is famous for its caramel sauce pudding, buttered toast and ham and egg sandwiches.

Across Japan, consumers and companies like Heckeln face label shock for everything from coffee, meat bowls and other items whose prices have barely moved during the country’s decades of deflation.

Japan’s core consumer inflation, which excludes fresh food prices, only stopped falling in August, breaking a 12-month deflationary period. Economists and policy makers expect to see recent price increases reflected in official data in the coming months.

Although Japan’s inflation remains modest by global standards, rising raw material costs https://www.reuters.com/world/asia-pacific/japan-wholesale-inflation-spikes-squeezing-corporate-profits- 2021-10-12 have made it nearly impossible for companies in the world’s third-largest economy not to pass on wholesale price increases, something they have typically resisted for fear of losing business.

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For younger Japanese, many of whom do not recall significant price increases, this has come as a huge surprise, especially as households, workers and businesses struggle to shake off the economic impact of the pandemic.

“It’s terrible, the income hasn’t changed. Taxes are going up. People are getting poorer and poorer, ”said Yuka Urakawa, 23, who works in the beauty industry and was going to dine with noodles near Tokyo’s Yurakucho Station.

Like many on social media, you’ve noticed changes in the prices of meat bowls at chain restaurants like Matsuya Foods.

At most of its outlets, Matsuya stopped selling its 380 yen “premium” meat bowl and started offering regular bowls with cheaper ingredients like frozen meat and Chinese chives for the same price.

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Dairy manufacturer Meiji Holdings has raised the prices of its margarines by as much as 12.8%, the first increase since 2008, and other food companies have also raised the prices of their main product lines for the first time in years.

While not necessarily welcomed by consumers, the trend may be starting to alter the way the Japanese perceive the prices they pay for commodities https://www.reuters.com/world/asia-pacific/more- Japan-households-see-higher- inflation-year-now-survey-box-2021-10-11.

“It seems that prices in Japan were too cheap for too long compared to other countries,” said Nozomi Yuasa, 28, who was also dining near Yurakucho station and has noticed increases in the prices of eggs, dairy products and sweets.

The Bank of Japan’s quarterly “tankan” business survey this month showed that more companies face higher input costs, but also experience increases in the price they charge customers.

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While reviving stagnant consumer prices has been the central bank’s main goal for years, its strategy has been to do so by fueling demand. Inflation caused by restricted supply, on the other hand, is unwelcome, especially if it is not accompanied by an increase in wages.

Some companies, aware of the sensitivity of households to price increases, are acting with caution. Aeon Co Ltd, Japan’s largest retailer by sales, said it will not raise prices for some 3,000 products under its own Topvalu brand this year, but will instead seek to keep costs low in part through bulk purchases.

“Japan’s demand recovery is being delayed due to the coronavirus,” said Hiroaki Muto, an economist at Sumitomo Life Insurance Co.

“If there are price increases, it will result in less demand.”

($ 1 = 113.4900 yen)

(Reporting by Daniel Leussink and Leika Kihara; Editing by Sam Holmes)

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