Price increases are prompting Japanese shoppers to buy less mayonnaise, showing the fragility of any economic rebound unless wages keep up with living costs.
Production of the sauce fell 5.1 percent in the five months that ended on Nov. 30 from a year earlier, which partly reflected stockpiling before Kewpie Corp. hiked prices by as much as 9 percent in July, followed by Ajinomoto Co. in August. The cost of living in Japan, excluding fresh food, climbed at the fastest pace in five years in November, even as salaries continued a tailspin that started in June 2012.Lower earnings, higher prices and a looming tax hike present a triple burden for households in the world's third-largest economy, prompting Bank of Japan Gov. Haruhiko Kuroda to urge regional business leaders to raise basic pay. While swaps indicate annual inflation of 2.12 percent for the next two years, economists surveyed by Bloomberg News said the BOJ will modify or abandon its 2 percent target.
"The trend appears to be a sign that bad inflation is unfolding," Toru Suehiro, a market economist in Tokyo at Mizuho Securities Co., said of the drop in mayonnaise production. "Stockpiling shows consumers are sensitive to prices. If salaries had been rising, there wouldn't have been such stockpiling."
Even as 15 years of deflation lowered the cost of living, consumers didn't have as much purchasing power as those in other developed nations. Salaries have fallen 8 percent since they peaked in 1998, figures from the labor ministry show.
Japan's average annual wage stood at $34,138 last year after adjusting for the differences in inflation, lagging behind South Korea, Spain and Australia, according to figures compiled by the Organization for Economic Cooperation and Development. The highest was $55,048 in the United States, while Mexico has the lowest wage, at $13,775, the OECD data show.
Source: Japan Times
"The trend appears to be a sign that bad inflation is unfolding," Toru Suehiro, a market economist in Tokyo at Mizuho Securities Co., said of the drop in mayonnaise production. "Stockpiling shows consumers are sensitive to prices. If salaries had been rising, there wouldn't have been such stockpiling."
Even as 15 years of deflation lowered the cost of living, consumers didn't have as much purchasing power as those in other developed nations. Salaries have fallen 8 percent since they peaked in 1998, figures from the labor ministry show.
Japan's average annual wage stood at $34,138 last year after adjusting for the differences in inflation, lagging behind South Korea, Spain and Australia, according to figures compiled by the Organization for Economic Cooperation and Development. The highest was $55,048 in the United States, while Mexico has the lowest wage, at $13,775, the OECD data show.
Source: Japan Times
