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ECONOMY > Economic Indicators

Food inflation takes bigger bite in Japan, with bread leading way

  • April 1, 2022
  • , Nikkei Asia , 6:49 a.m.
  • English Press

By Nikkei staff writers

 

TOKYO — From bread and pasta to frozen items, Japanese food manufacturers are raising prices at a pace not seen in years and having more success at persuading retailers to pass inflation costs onto consumers, a Nikkei study shows.

 

Nikkei examined prices at roughly 470 Japanese supermarkets, comparing average store prices between November and February. The findings are based on pricing data from Nikkei POS.

 

Bread and pastries accounted for the steepest price gains, at 6-7%. Frozen food and dry pasta each climbed by 3%. Leading Japanese pastry producer Yamazaki Baking raised prices in January, while frozen food maker Nichirei Foods hiked prices in November.

 

Of 60 major food items, manufacturers have announced price hikes on 14 products since last fall. Store prices have increased on 12 of those products, or nearly 90%.

 

During Japan’s most recent food price hikes in 2019, just four out of seven products sustained price increases at grocery aisles within six months of the initial announcements by manufacturers.

 

Food makers announcing price hikes in previous years often settled for more limited increases at the store level due to resistance from retailers. But now, manufacturers are largely standing their ground.

 

These manufacturers face not only higher labor and logistics costs, but also sharply elevated prices for raw materials. Yamazaki Baking said it would raise prices for bread by an average of 9%, and the store prices did indeed go up by 9% as of February.

 

The food producers also are cutting funds that underwrite discounts and sales, leaving retailers to pass on costs to customers as a means to stay profitable.

 

The global food price index maintained by the United Nations Food and Agriculture Organization shows prices gaining 5.3 points in February to reach 140.7, the first record in 11 years.

 

“The cost of soybeans has increased greatly to a level where we could not stay in business without revising prices,” said Shozaburo Nakano, president of soy sauce maker Kikkoman. The company raised product prices in February.

 

The Bank of Japan’s corporate goods price index for February rose 9.3% compared with a year earlier, the fastest rate of increase since the 10.4% gain in December 1980 during the oil crisis.

 

“With manufacturers raising prices, we’ve reached the limit of how much we can absorb,” said a representative of a major supermarket operator.

 

Rising food prices are fueling inflation across the board. The consumer price index minus fresh foods gained 0.6% on the year in February to reach 100.5 points.

Food prices alone provided a 0.35-point lift.

 

More price hikes are planned. Ketchup will cost more for the first time in seven years, while beverages and instant noodles will receive their first hikes in three years. Russia’s invasion of Ukraine has sparked higher wheat prices, and the yen’s sharp depreciation is spurring further inflation.

 

The price hikes are pushing consumers to be more frugal. Despite the higher costs for gas and other products, Japanese wages have risen only modestly.

 

Some shoppers are turning to generic brand foods. Supermarket operators Aeon and Seiyu have said they will leave prices for their private brands in place, and some of those products are drawing higher sales.

 

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