In Japan, raising prices isn’t just business — it’s something to apologise for

TOKYO, Nov 9 — Japan's largest clothing retailer Uniqlo recently faced public backlash after it decided to increase the price of its basic socks, a move the company later reversed. This incident, alongside a similar situation involving a family restaurant chain Saizeriya that issued an apology for a small price increase, sheds light on the challenges faced by Japanese firms as they grapple with rising costs in an environment where deflation has been a persistent issue for decades.

The Bank of Japan's inflation target of 2 percent was met in September, but it took until 2022 for the inflation to start rising again in Japan, primarily due to global energy shocks and geopolitical tensions. Despite this, Japanese consumers are accustomed to avoiding price hikes due to their aversion to higher prices, which is a stark contrast to other G7 economies where wage hikes have been more favorable.

Small and rural businesses are particularly vulnerable to such price hikes as they rely heavily on loyal customers. Business owners in Japan, including a ramen shop owner in Okayama who refuses to raise prices despite mounting costs, express guilt and concern for their customers. Uniqlo's reversal of its sock price hike was an attempt to maintain its reputation as an affordable brand, while Saizeriya's apology was seen as a sign of self-flagellation.

As borrowing costs soar and interest rates rise, Japanese consumers face higher costs for everyday purchases, even as real wages have increased year-on-year. The economist Tsutomu Watanabe predicts that it will take another three to four years for Japanese consumers to fully accept inflation as a normal part of their economic reality.