Price hikes bite Japanese businesses and households
High street price rises as wholesale inflation accelerates at record rates Japanese consumers are facing challenges as a wave of price hikes will hit essential items such as food and daily goods in the new fiscal year beginning on April 1 due to the rising cost of raw materials. Higher material costs are also squeezing corporate earnings in Japan. For example, Aeon Co., Ltd., the biggest operator of general merchandise stores in Japan announced that its operating profit for the fiscal year ending February 2022 decreased from 200 billion yen to 173 billion yen, and its final profit fell to 6 billion yen from 20 billion yen. On the other hand, Aeon’s sales have increased from 8.62 trillion yen to 8.71 trillion yen, indicating that Aeon's profit margin is declining. Japanese companies have been gradually passing on surging costs to consumers by raising retail prices, a change from their cautious stance on price hikes for fear of hurting demand, however the pass-through seems to ha