# From beef bowls to coffee, cost surge squeezes Japan’s salaryman staples
Author:  Pal Sinha, Barnali 
Author URL: https://financedigest.com/author/pal-sinha-barnali
Published: 2021-10-14
Category: NEWS
Category URL: https://financedigest.com/category/news
Meta Title: Japan Wholesale Inflation Surge Squeezes Coffee Shops
Meta Description: In 50 years running a cafe in Tokyo, Shizuo Mori can't remember a time when his coffee supplies cost this much. The 78-year-old, owner of Heckeln, is
URL: https://financedigest.com/from-beef-bowls-to-coffee-cost-surge-squeezes-japans-salaryman-stapleshtml

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By Daniel Leussink and Leika Kihara

TOKYO (Reuters) – In 50 years running a cafe in Tokyo, Shizuo Mori can’t remember a time when his coffee supplies cost this much.

The 78-year-old, who owns Heckeln, an old-school coffee shop in Tokyo’s Toranomon business district, says the wholesale cost of his main product has surged 5% in the last three months.

That is a jolting experience for a [country where weak growth has meant that prices](https://www.financedigest.com/netflix-cuts-prices-in-some-countries-to-boost-subscriptions-shares-drop.html "Netflix cuts prices in some countries to boost subscriptions, shares drop") of many things – including wages – haven’t risen much in decades.

While he has not yet passed on the increase to his customers – coffee at his cramped shop costs 400 yen ($3.50) a cup – [price pressures](https://www.financedigest.com/heavy-norwegian-gas-maintenance-adds-to-energy-price-pressure.html "Heavy Norwegian gas maintenance adds to energy price pressure") are squeezing his bottom line and he knows his regulars have low tolerance for such hikes.

Salarymen don’t get paid a lot, so everyone will [stop drinking if prices](https://www.financedigest.com/mr-kipling-maker-premier-foods-to-stop-price-hikes-this-year.html "Mr Kipling maker Premier Foods to stop price hikes this year") are too high,” said Mori, whose shop is famous for its caramel sauce pudding, slabs of buttered toast and ham and egg sandwiches.

Across Japan, [consumers and businesses](https://www.financedigest.com/citigroup-says-will-close-russian-consumer-commercial-business.html "Citigroup says will close Russian consumer, commercial business") like Heckeln are facing sticker shock for everything from coffee, beef bowls and other items whose prices have barely budged during the country’s decades of deflation.

Japan’s [core consumer inflation – which excludes fresh food prices – only stopped falling](https://www.financedigest.com/boes-mann-falling-headline-inflation-high-core-make-policy-difficult.html "BoE’s Mann: Falling headline inflation, high core, make policy difficult") in August, snapping a 12-month deflationary spell. Economists and policymakers [expect to see the recent price rises](https://www.financedigest.com/instant-view-us-may-payrolls-rise-up-than-expected.html "Instant View: US May payrolls rise up than expected") reflected in official data in the coming months.

Although Japan’s inflation is still modest by global standards, surging raw material costs https://www.reuters.com/world/asia-pacific/japan-wholesale-inflation-spikes-squeezing-corporate-profits-2021-10-12 have made it almost impossible for firms in the world’s third-largest economy not to pass on wholesale price hikes, something they have typically resisted for [fear of losing](https://www.financedigest.com/london-fears-losing-luxury-shoppers-to-paris-and-milan.html "London fears losing luxury shoppers to Paris and Milan") business.

For younger Japanese, many with no memory of significant prices hikes, that has come as a rude surprise especially as households, workers and [businesses struggle to shake off the economic hit](https://www.financedigest.com/julius-baer-2022-profits-fall-as-it-hits-business-cycle-targets.html "Julius Baer 2022 profits fall as it hits business cycle targets") from the pandemic.

“It’s terrible – incomes haven’t changed. [Taxes are rising](https://www.financedigest.com/the-rise-of-the-tax-technologist.html "The rise of the tax technologist"). People are increasingly becoming poor,” said Yuka Urakawa, 23, who [works in the beauty industry](https://www.financedigest.com/hybrid-working-a-risk-or-opportunity-for-the-financial-services-industry-2.html "Hybrid working: a risk or opportunity for the financial services industry?") and was going for a noodle dinner near Tokyo’s Yurakucho station.

Like many on social media, she has noticed [changes to prices](https://www.financedigest.com/explainer-oil-price-surge-changes-ecb-narrative-only-at-the-margins.html "Explainer-Oil price surge changes ECB narrative only at the margins") of beef bowls at restaurant chains like Matsuya Foods.

At most of its outlets, Matsuya has stopped selling its 380 yen “premium” beef bowl and started [offering regular bowls using cheaper ingredients such as frozen beef and Chinese spring onions for the same price](https://www.financedigest.com/twitter-shares-cruise-towards-musks-offer-price-as-deal-deadline-looms.html "Twitter shares cruise towards Musk’s offer price as deal deadline looms").

Dairy products maker Meiji Holdings has hiked prices of its margarines by up to 12.8%, the first increase since 2008, and other [food companies have also raised prices](https://www.financedigest.com/world-food-prices-hit-record-high-in-2022.html "World food prices hit record high in 2022") on their main product lines for the first time in years.

While not necessarily welcomed by consumers, the trend may be starting to nudge the way Japanese perceive the [prices they pay](https://www.financedigest.com/shell-energy-to-pay-for-overcharging-price-cap-customers-ofgem.html "Shell Energy to pay for overcharging price cap customers -Ofgem") for staples https://www.reuters.com/world/asia-pacific/more-japan-households-see-higher-inflation-year-now-boj-survey-2021-10-11.

It feels like Japan’s prices were too cheap for too long compared to other countries,” said Nozomi Yuasa, 28, who was also having dinner near Yurakucho station and has noticed [price rises](https://www.financedigest.com/renault-revenues-rise-30-in-q1-on-higher-sales-and-prices.html "Renault revenues rise 30% in Q1 on higher sales and prices") in eggs, dairy and candy.

The Bank of Japan’s quarterly “tankan” business survey this month showed more companies [facing higher input costs](https://www.financedigest.com/estonias-pro-kyiv-government-faces-election-test-amid-cost-of-living-crisis.html "Estonia’s pro-Kyiv government faces election test amid cost of living crisis"), but also seeing rises in the price they charge to customers.

While [reviving stagnant consumer prices has been the central bank’s](https://www.financedigest.com/gucci-banks-on-private-salons-for-the-ultra-rich-to-revive-sales.html "Gucci banks on private ‘salons’ for the ultra-rich to revive sales") main objective for years, its strategy has been to do so by stoking demand. Inflation caused by constrained supply, on the other hand, is unwelcome, especially if it’s not matched by [increased wages](https://www.financedigest.com/greece-to-increase-minimum-wage-again-before-election.html "Greece to increase minimum wage again, before election").

Aware of households’ sensitivity to [price hikes](https://www.financedigest.com/sony-hikes-ps5-price-on-economic-pressures-rising-rates.html "Sony hikes PS5 price on economic pressures, rising rates"), some firms are treading carefully. Aeon Co Ltd, Japan’s largest [retailer by sales](https://www.financedigest.com/spains-november-retail-sales-fall-0-6-on-year.html "Spain’s November retail sales fall 0.6% on year"), said it won’t raise prices on about 3,000 products of its own brand Topvalu products this year, instead seeking to keep cost low in part by bulk-buying.

Japan’s demand recovery is lagging due to the coronavirus,” said Hiroaki Muto, economist at Sumitomo [Life Insurance](https://www.financedigest.com/types-of-life-insurance.html "Types of Life Insurance") Co.

If there are price rises, it’ll result in [lower demand.”](https://www.financedigest.com/lights-maker-signify-cuts-annual-outlook-on-lower-consumer-demand-china-woes.html "Lights maker Signify cuts annual outlook on lower consumer demand, China woes")

($1 = 113.4900 yen)

(Reporting by Daniel Leussink and Leika Kihara; Editing by Sam Holmes)


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