Today may be the day when the shock comes.
No, not from the first opening of the climbing season on Mt. Fuji since the mountain and its environs were proclaimed UNESCO World Heritage sites, though the likely result is more crowding on what is an already overcrowded mountain.
[I am of two minds regarding the listing. The listing does grant the communities at the foot of the mountain the ability to start charging climbing fees eventually (Link). Such fees will be a source funding for facilities and environmental clean up on the mountain. However, the government's successful last second lobbying efforts to have Miho no Matsubara included in the listing, after the UNESCO panel recommended its exclusion (Link - J) smells of graft and/or vote trading.
So both the good and the bad on the big ledger.]
No, today is when we find out whether or not the heretofore restrained rise in consumer prices will stop being restrained, smacking shoppers in the face with a sudden, across-the-board jump in prices for household goods, electricity, transportation and just about everything else.
Consumers have been largely shielded from the effects of the Abe administration's destruction of the international standing of the yen. As of today, the start of the new quarter, the gloves will likely come off. Producers of flour, bread and meats have already announced significant jumps in prices for today (Link - J). All producers and service providers will be under pressure to follow suit, either openly or through stealth (Link - J). Even the luxury goods with their absurd pricing that gives them the leeway to swallow the effects of currency fluctuations, are set to rise today. (Link - J)
[Hint: to those who have been using the recent increases in the sales of high-end imported luxury goods and luxury cars as barometers of a hotter Japanese economy, think it possible that even the buyers of these items have been looking ahead and buying now, before the sticker shock comes, rather than loosening their purse strings.
Oh, and you might have wanted to mention that increased purchases of imported luxury goods are a net negative for GDP.]
In the anecdotal everyday, retailers have been acting peculiar. When I tried to buy a new bag (my old one being a tattered embarrassment) at a fast retail outlet, I was told there were no bags. When I asked whether this meant the chain no longer sells bags, the clerk told me peremptorily that no, they still sold bags. Only they did not have any left in the stock room.
A state of affairs which anyone can tell you never occurs unintentionally.
As for my favorite discount foreign food and coffee bean seller, it has until now not raised any of its prices -- an impossible state of affairs given that all of its products are imported. Ominously, it had a special sales offer through June 30, encouraging consumers to buy five flavors of beans in return for a reduction in price on a future purchase -- an offer looking suspiciously like the kind of warehouse cleaning a company would undertake before releasing a completely revamped line of products at a higher base price level.
The price rises for consumer goods will be large but not unreasonable, despite soaring raw materials and energy prices. Deeply enracinated deflationary expectations will force producers and retailers to moderate their increases, for now. They will, of course, have to swallow a part of the rise in the cost of inputs, meaning they will forgo regular profits.
Or so we hope.
On the level of local government services, the price for an hour's swim today at the local public swimming center costs 20% more than it did yesterday. Or it would, if the pool were not closed today in order for employees to reset the automated ticket dispensers and takers and replace all the signage. Considering that the water in the pool is heated by the incineration of the area's garbage, the jump in price, percentage-wise, seems uncalled for -- unless, of course, it is inordinately expensive to make a price change and making the jump in prices a big one is one way to recoup the cost of the transformation.
I do not have to elaborate how much the double punch -- a sudden jump in the prices of everyday goods and producers having to accept lower or no profits -- will likely affect personal consumption, remuneration and investment over the summer and into the fall.
But then, as any credible statistical evidence of declining consumption, income and/or investment will not appear until after the Liberal Democratic Party crushes all of its enemies in the July 21 House of Councillors election, no worries, eh, Mr. Abe?
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