Raising prices is never easy and something most managers fret over.
Raising prices in Japan has been rare, but it’s fast becoming wide spread. The central bank is keen to see inflation, it has set a 2% target and the Government has long been exhorting companies to raise salaries.
Now there are problems with the Yen. Long seen as a safe haven currency, the Yen has slipped faster in value against the USD in the last few months than many expected. Today at Yen123 to the $, some say it will slip further to Yen128 by the year end. The gap between Japanese and other major markets interest rates seems to widen every month. No one in Government here is talking of rate rises (yet).
Whilst Japan manufactures a lot of final consumption products, it’s still a big importer of raw materials, oil for one and then basic commodities like wheat, soy and so on. All of these commodities have soared in value, the weak Yen has further exacerbated the problem.
Today Meiji announced price hikes on 96 SKUs from ice cream, other frozen foods, nutritional items and protein related products. Some items are going up by more than 6%.
MacDonalds Japan announced price increases on Hamburgers early in March.
A taste of things to come.