Inflation soars, people tighten spending

The Japanese government said on January 19 that the core consumer price index (CPI) rose 3.1% in 2023 from a year earlier, the biggest increase since 1982, due to rising food costs and a weaker yen that made imports more expensive.

Inflation in Japan increased the most since 1982. (Source: Bloomberg)

Core consumer prices in Japan rose 2.3% in December 2023 from a year earlier.

The index is down from 2.5% in November 2023, but is still above the Bank of Japan's (BoJ) 2% target for the 21st consecutive month.

According to Japan's Ministry of Internal Affairs and Communications, hotel fees increased by 59% in December 2023, while electricity bills decreased by 20.5%.

The latest inflation figures come as the Japanese government urges businesses to raise wages ahead of annual spring talks between employers and labor unions.

The country's average real wage - adjusted for inflation - fell year-on-year for the 20th consecutive month in November 2023, suggesting inflation continues to overshadow the effectiveness of wage increases.

The Japan Trade Union Confederation (Rengo), the country's largest group representing various industry unions, is demanding a wage increase of 5% or more in upcoming negotiations.

In 2023, in a survey by Tokyo-based social lending service Lendex, nearly half of salarymen between the ages of 20 and 50 said they spent less than 500 yen a day on lunch. Many of them also said they would prepare their own bento from home to save money.

Another survey by Japanese payment service provider Edenred found that about 40% of male and female office workers have cut back on lunch expenses, while nearly 70% said they have skipped their favorite food just to save money.

Source