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Japan’s household spending down 3.2% in May - Spending on services slid 7.64%

Prior to the release of May’s household spending figures, a Kyodo News survey forecasted a 2.2% fall in spending. The results, however, were worse than expected: According to data released Friday by the Ministry of Internal Affairs and Communication, Japan’s household spending fell 3.2% in May.

May was thus the third consecutive month with a fall in consumer spending, following April’s 2.2% decline and a drop of 1.6% in March. According to the Statistics Bureau, spending at households with two or more people came to 288,128, down 3.2% from a year ago. Income at households with a salaried worker as head of household came to 435,076 yen, which was down 0.6% from a year ago, while spending at workers’ households was at 315,152 yen, down 0.9% from last year.

Here’s a breakdown of spending per category, along with changes against May of last year: Read more

What Japan Thinks on Apple’s iPhone pricing

One of my favorite blogs, What Japan Thinks, has just published an excellent translation/writeup of a recent survey concerning Japanese consumer perceptions of Apple’s iPhone and it’s pricing. What I found most interesting is that just over 50% of respondents to the survey said that they would switch to an iPhone if the monthly cost came to 20,000 yen or less.

Japan’s consumer price index up 1.5% in May, but down 0.1% when food, energy stripped out

Data released by the Ministry of Internal Affairs and Communications shows that Japan’s core consumer price index rose 1.5% in May, showing an increase for the eighth month in a row. Media outlets have scrambled over one another to announce that May’s 1.5% rise was the highest seen since a 1.8% jump back in March 1998. That may be true, but it’s worth looking a bit deeper into the numbers than that.

First, it’s important to remember that Japan counts energy prices as part of core inflation, although fresh food is excluded. Thus, it’s helpful to strip both fresh food and energy costs in order to get a clearer picture of the situation. In March, we commented that once both fresh food and energy costs were stripped from the CPI, consumer prices had actually seen a rise of 0.1% - the first rise seen since 1998. In April, that figure slid back to -0.1%. Here’s a breakdown for May:

• May general nationwide consumer price index: +1.3%
• May general nationwide consumer price index (excluding rent): +1.5%
• May nationwide core CPI (excluding fresh food): +1.5%
• May nationwide consumer price index (excluding fresh food and energy): -0.1%

Here is what the major media is either not reporting or downplaying in its coverage of this issue: Once fresh food and energy are both stripped out, we still see deflationary pressure in Japan’s consumer prices. This seems somewhat surprising, since we expect higher oil prices to have affected prices all the way from procurement to production, and shipping to storage - at least until the product hits this consumer - where we then expect to see increased prices to offset those supply-side costs. This is not, however, what’s happening, and perhaps we need to take a closer look at household spending statistics in order to see why. For now, though, it’s still food and energy prices that are driving Japan’s current inflationary trend. Food prices were up 2.4% in May and energy prices were up 10.5%, with gasoline prices soaring 18%.

Little relief appears to be in site for June or July’s figures, as oil just hit $140 a barrel.

Here’s a breakdown of price increase by major category:

• Fuel, light and water charges +5.5%
• Transportation and communication +2.9%
• Food +2.4%
• Education +0.7%
• Clothes and footwear +0.4%
• Miscellaneous +0.3%
• Housing +0.1%
• Medical Care -0.5%
• Reading and recreation -0.8%
• Furniture and household utensils -0.6%

Economic and fiscal policy minister Hiroko Ota (who was the last minister standing up and insisting that the Japanese economy was still in deflation a few months ago) put it simply: ”The CPI is not pulled up by demand. This is no good.”

Especially with spaghetti prices increasing 32.2%, cheese 27.7% and chocolate 23.2%.

200,000 of Japan’s fishing vessels to strike for public awareness of increased fuel costs on July 15

According to yesterday’s Asahi Shimbun, Japan’s National Federation of Fisheries Cooperatives is planning a one-day shutdown of fishing operations on July 15. The paper reports that 16 fishing groups with a total of 200,000 vessels will stay in port on that day in order to raise public awareness of the difficulties faced by the fisheries industry in the current economic climate. The group claims that the current price of 95,300 yen per kiloliter is 2.4 times greater than it was four years ago.

In the article, Kuniyuki Miyahara, who runs the National Foundation of Fisheries Cooperatives, says that the spike in fuel prices has caused the nation’s fishing groups to exhaust all means of holding down costs by themselves. He would like for the government to start subsidizing fuel costs for fishing vessels.

Will this really raise public opinion? Last month we saw a one-day stoppage of 3,000 squid fishing vessels. Prices briefly shot up 30% and then returned to normal. The public simply ignored squid for a few days. Is a one-day stoppage of fishing vessels going to do anything to make the public call for subsidized fuel for fishing vessels?

If the action fails to help raise awareness, Mr Miyahara told the Asahi that spending a second day in port is not out of the question.

Japan to commence emergency butter imports from October

A post discussing Japan’s recent importation of whale meat from Iceland published back on June 4 ended with the line, “Seriously, we could use some butter.”

The Ministry of Agriculture has listened. Today’s Nikkei is reporting that Japan will import about 5000 tons of butter this autumn, from Europe and other yet unspecified markets. The plan is to get the butter into Japan sometime around October, when it is believed that shortages will be the most acute.

In case you’re worried over whether The Ministry of Agriculture will allow the butter to be imported under a free market, fear not: the Agriculture and Livestock Industries Corporation, an entity controlled by the ministry itself, will be handling the import shipments.

Ex-Nova President Sahashi arrested on embezzlement charges

Asahi is reporting that former Nova President Nozomu Sahashi has been arrested on charges of embezzlement, after having initially been brought in for voluntary questioning on Tuesday morning.

Since this arrest was so predictable, so obviously in the making for such a long time (and possibly only the tip of the iceberg), it can’t be good PR for the firm that decided to buy the rights to Nova’s name - and it doesn’t look like the negative PR is going to stop anytime soon. The decision to keep the firm’s muck-dragged name and not go through some sort of re-branding strategy baffles the mind.

As letsjapan.org is following these events in more detail, we recommend anyone following the case to head over there to read up.

HT to Shawn at letsjapan.org and JEN reader trev.

Japan’s steelmakers agree to 100% price hike for Australian iron ore

One day after China’s Baosteel Group agreed to pay up to 97% more for Australian iron ore, Nippon Steel and other Japanese steelmakers are set to accept a 100% jump in prices for the same iron ore. This follows a 65% hike in prices for Brazilian iron ore that was also recently agreed to. 60% of Japan’s iron ore for steel comes from Australia.

What can we expect to follow? It seems unlikely that Nippon Steel - Japan’s largest steelmaker - and its four main domestic rivals (JFE, Sumitomo Metal, Kobe Steel and Nisshin Steel) will be able to get away with not passing costs on to customers. This could put a pinch on automakers who have already felt the sting of increased steel prices over the past year. In the fourth quarter of 2007, the spot-market price for hot-rolled sheet steel was at $535 a ton. Since then, that price has shot up to $1,035.

Although this may hurt Japanese automakers domestically for the time being, as customers put off purchases of cars until prices come back down, it could be a boon for Japanese automakers in the US market, where they are in better position to sell smaller, more fuel-efficient, “steel friendly” autos.

Japan supermarket sales fall 1.1% in May

Japan’s supermarket sales fell for the second consecutive month in May, dipping 1.1% to 1.095 trillion yen, according to the Japan Chain Stores Association. These figures follow a 0.8% fall in April. Actually, when new shops (those opened within the past year) are included in the data, supermarkets saw a 6.4% decline in sales.

As we are seeing almost every month, outside of food sales, supermarkets are not doing very well at all. Here is a breakdown of May’s adjusted figures: Read more

Japan looking for 20 million foreign tourists annually by 2020

A very short piece in Friday’s Nikkei tells us that the Japanese government’s tourism promotion panel has set a goal of having 20 million foreign tourists visit Japan each year by 2020. In order to explore potential methods for meeting this goal, the panel will set up a working group by the end of July.

The panel’s previously stated goal of having 10 million tourists visit Japan each year by 2010 is still posted on their website. In 2007, 8.35 million tourists visit Japan. The jump to 20 million would be a 140% increase. There are also supposed to be 60,000 new landing slots opening up for international flights at Narita and Haneda airports over the coming few years. Might more new landing slots, and perhaps runways, be on the way?

The Nikkei’s piece ends with this short paragraph:

One idea likely to be considered is making traffic signs and displays at tourist sites available in several languages, as well as employing more multilingual tour guides.

Not exactly revolutionary. Hopefully the panel itself will have some ideas better than the low bar being set here.

Japan’s nationwide department store sales down 2.7% in May

With the balance of assets at Japan’s households reported to have declined 3.6% in fiscal 2007, consumer confidence near all-time lows, and household spending sluggish, it comes as no surprise that Japan’s nationwide department store sales registered a 2.7% decline in May. Japan’s department store sales have been posting declines since February, when they registered a 0.9% gain on the back of strong food sales. As January’s sales were down 2.1%, February is thus the only month this year to have seen a rise in sales, and even that was less than one percent. Japan’s department store sales have fallen for eleven consecutive years on a nationwide basis.

Before we get into anything else, here’s a breakdown for May sales figures by category: Read more

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