Saudi Press

Saudi Arabia and the world
Friday, Feb 27, 2026

Cost of living: The shock of rising prices in Japan

Cost of living: The shock of rising prices in Japan

As a child growing up in Japan, things very rarely seemed to get more expensive.

My favourite lunch was always available for a 500 yen coin ($3.90; £3.10) and it remained that way until 2021. The same for shoes or clothes, little changed.

I was taught to save, save and save, and repeatedly warned that the value of our family home had collapsed in the 1990s, when the property market crashed.

This painful financial loss meant my parents, and many others like them, were never able to sell their house again or upgrade it.

But when prices for everyday items don't increase, people don't actively spend money.

Companies, in turn, respond by not increasing salaries, which lowers consumer demand and prices further. When you cannot get a pay rise, you don't rush out to go shopping very often.

Taken altogether, this slows an entire country's economic growth - a vicious cycle Japan has been trapped in for decades.

While many parts of Asia grew richer, Japan's wealth stagnated. Japan's gross domestic product per capita - the country's economic output per person - remained stuck at the same level since the 1990s. By 2010, China had overtaken it as the world's second-biggest economy.

Productivity rates have remained relatively static


For decades, with little success, the country's central bank has tried to stimulate growth to get Japanese to "spend more, invest more, the wage goes up and the price goes up in tandem moderately", explains Nobuko Kobayashi, a partner with EY-Parthenon.

In April, the benchmark measure for consumer prices rose 2.1%, enough that inflation this year is expected to finally hit the Bank of Japan's 2% target, after three decades of essentially no rise at all.

However, the jump has nothing to do with domestic economic policy. It has been driven largely by higher import costs, a global increase in raw material and energy prices - pushed higher by the pandemic and the war in Ukraine.

Ms Kobayashi even warns it could mark "the start of bad inflation, because wages have not gone up yet". In fact, average salaries have hardly risen for over three decades, so things are about to get painful for shoppers.

Japanese workers' take-home pay has improved very little since the 1990s


While post-Covid there are many governments battling rising prices and a higher cost of living, it comes as a huge shock to Japan, where people have been used to decades of stable prices.

When the price of Japan's everyday snack - umaibo - which was always priced at 10 yen ($0.075; £0.06) since its creation 43 years ago - went up by 20%, it sent a shockwave through the nation.

In a society which believes in sharing social burdens, increasing prices has become something of a cultural taboo.

So much so that Yaokin, the company which makes the popular snack, had to launch an ad campaign explaining why it had to increase the price.

But it was inevitable and one by one, everything from mayonnaise and bottled drinks to beer has become more expensive. According to Teikoku databank, prices for more than 10,000 food items are set to go up by an average of 13% this year.

Snack maker Yaokin launched an ad campaign to explain the price hike


Central Bank dilemma


And here, Japan has a really tricky problem: central banks across the rest of the world have responded to soaring prices by incrementally raising interest rates to help keep inflation in check. The Bank of Japan has held rates at rock bottom for years.

If there is a significant gap in interest rates between Japan and other major economies, such as the US, the Japanese currency sharply weakens. The yen recently slid to 20-year-lows against the dollar.

A weaker yen means that imported items - crucially oil and gas - cost even more.

"Consumers are not accustomed to accepting inflation," says Takeshi Niinami, who is the chief executive of Suntory Holdings, known for Japanese whiskies Yamazaki, Hibiki and Hakushu, as well as beer and non-alcoholic beverages such as bottled water and coffee.

The company has recently announced a price hike across most of its product range from October, to give itself time to discuss these increases with its distributors. Mr Niinami puts this down to the global supply chain crunch, caused by the pandemic and China's recent lockdowns.

"Overall, it has been accepted. But there is still a challenge from big retailers," he says.

Suntory CEO Takeshi Niinami says the company raised prices of its products due to supply chain issues


Part of the rationale behind the government's efforts to promote inflation in the Japanese economy has been to try to push wages higher.

"There's huge pressure from society and the government to raise wages, but we need to increase productivity," says Mr Niinami.

"But it's difficult to increase productivity all of a sudden. We have so many peers in one industry, so we have to consolidate."

Mr Niinami says Japan also needs to invest in new sectors such as green innovation or healthcare to stimulate the economy, and create new jobs to boost average salaries. He also hopes that the government will do more to attract foreign investors.

But all that will take time and job creation is just one of many issues Japan has been grappling with for decades.

The only silver lining of a weaker yen in the short term could be an influx of international tourists keen to spend their money in Japan, although the borders are only just starting to reopen after Covid.

Newsletter

Related Articles

Saudi Press
0:00
0:00
Close
Emerging Saudi–Turkish Alignment Draws Attention as Potential Strategic Challenge for Israel
Saudi Arabia Unveils $100 Billion Technology Investment Fund to Accelerate Post-Oil Diversification
US Lawmakers Question White House Consideration of Saudi Nuclear Enrichment Framework
Saudi Arabia Reaffirms Firm Commitment to Two-State Solution in Renewed Diplomatic Push
Saudi Arabia Launches Central Kitchen in Gaza to Deliver 24,000 Meals a Day
Saudi Arabia Announces $346 Million Support Package for Yemen in Renewed Humanitarian Push
Saudi Investors Increase US Equity Exposure Amid Domestic Market Weakness
Saudi Arabia Unveils Major Desert Gas Development in Strategic Shift Toward Diversified Energy Growth
Satellite Images Indicate Increased Aircraft Presence at Saudi Airbase Hosting US Forces
Telephone Diplomacy Sparks Tensions Between Two Key US Allies After Trump Intervention
Asian LPG Prices Surge After Damage Forces Saudi Aramco Export Disruptions
Saudi Arabia Unveils $100 Billion AI Infrastructure Fund to Challenge US and China
Saudi Stocks Close Lower as Tadawul All Share Index Falls 1.28 Percent
Saudi Arabia Launches Smart Mapping System to Enhance Pilgrim Experience at Holy Sites
Cristiano Ronaldo Acquires 25 Percent Stake in Saudi-Owned Spanish Club Almería
U.S.–Saudi Relations Balance Transactional Deal-Making with Expanding Strategic Ambitions
Israel’s President Herzog Signals Cautious Message on Saudi Ties at UAE Iftar in Tel Aviv
United States and Saudi Arabia Strengthen Security Ties with Joint Explosive Ordnance Disposal Exercise
Saudi Arabia Responds to Israel–UAE Moves in Somalia as Regional Rivalries Intensify
Saudi Arabia Showcases Expanding Defense Ambitions at World Defense Show 2026
SECRETARY RUBIO on IRAN: Iran poses a very great threat to the United States, and has for a very long time.
Larry Summers, the former U.S. Treasury Secretary, is resigning from Harvard University as fallout continues over his ties to Jeffrey Epstein.
U.S. stocks ended higher on Wednesday, with the Dow gaining about six-tenths of a percent, the S&P 500 adding eight-tenths of a percent, and the tech-heavy Nasdaq climbing roughly one-and-a-quarter percent.
Nvidia posted better than expected results for the January quarter on Wednesday and forecast current quarter revenue above market estimates.
Saudi Arabia’s Coffee Renaissance Gains Momentum as Investment and Heritage Drive Industry Growth
Saudi Shipping Leader Bahri Expands Fleet as Tanker Rates Approach $200,000 a Day
Saudi Arabia Advances First National Urban Policy Through High-Level Leadership and Institutional Alliances
Major Life Sciences Summits to Spotlight Saudi Arabia’s Rise as Regional Biotech and Pharma Hub
Saudi Arabia Reframes Red Sea and Horn of Africa Strategy Amid Rising Security and Trade Stakes
Saudi Arabia Recalibrates Its Role in Shifting Regional and Global Power Dynamics
Saudi Retail Signals to Global Brands: Localise or Lose Ground in a Rapidly Evolving Market
Saudi Arabia Looks to Human Capital Investment to Unlock Demographic Dividend
Saudi Arabia and Iran Increase Oil Exports Amid Escalating Middle East Tensions
Saudi Data Protection Authority Intensifies Enforcement Under Personal Data Law
Saudi Arabia Raises Oil Output and Exports Amid Contingency Planning Over Iran Tensions
USS Gerald R Ford Arrives in Souda, Crete
Saudi Sovereign Wealth Fund Unit Expands Push Into Global Private Credit
Saudi Arabia Eases Headquarters Rules to Attract More Foreign Firms
Saipem Secures Major Offshore Pipeline Contract in Saudi Arabia
Saudi Arabia’s Targeted Oil Export Cuts to the US Seen as Strategic Signal Amid Global Supply Glut
Nemetschek Arabia Signs Strategic MoU with Saudi Facility Management Association
Gulf Markets Close Mixed as Saudi Shares Slip on Budget Deficit Concerns
Saudi Arabia Posts Largest Quarterly Budget Deficit in Years Amid Weaker Oil Revenues and Higher Spending
U.S. Lawmaker Urges Safeguards on Saudi Civil Nuclear Deal as Trump Administration Advances Agreement
Saudi Arabia and Gulf Allies Rally Behind Kuwait in Escalating Maritime Border Dispute with Iraq
Universal Aviation Secures License to Operate and Manage New General Aviation Terminal in Dammam
Tucker Carlson’s Saudi Arabia Remarks Spark Debate Over Israel Stance
GCC Secretary-General Holds Talks with EU Ambassador in Riyadh
Gulf States’ AI Investment Drive Seen as Strategic Bet on Technology and U.S. Security Ties
African Union Commission Chair Meets Saudi Vice Foreign Minister to Deepen Strategic Cooperation
×