Rise in the corporate goods price index hits a record high How long will price soaring last?

Even this year, the price increases are one after another.

Consumers are in a difficult situation, but companies that decide to raise prices are also facing difficult circumstances...

Behind this is the rise in the "price of goods" traded between companies.

There is a growing movement to pass on the increase in raw material costs to selling prices.

How long will this situation last?

We asked experts for their future prospects.

Customers say "I'm sad, but I can't help it" and "It's pretty hard"

McDonald's Japan, a major hamburger chain, has raised about 80% of the products sold at stores since the 16th, amidst a series of price increases in food and other items due to soaring raw material prices.

All prices include tax, hamburgers have been raised from 150 yen to 170 yen, cheeseburgers from 180 yen to 200 yen, and medium size French fries from 290 yen to 330 yen.

This company raised the price of its main products such as hamburgers in March and September of last year due to soaring raw material prices.

We interviewed customers who visited the store in Toshima Ward, Tokyo.

A woman in her 20s who uses the service two or three times a week said, "I was a little sad when I heard about the price increase, but I think it can't be helped because the prices of many things are rising." rice field.

A man in his 30s who goes there about once a week said, "Even if the price is raised by 20 yen, it might be too harsh for students. I often use the store, so I'm happy that it's cheaper."

Also, a woman in her 20s said about the price increase of hamburgers, "It's expensive, but I think it can't be helped. Even though my salary hasn't increased, prices are going up steadily, so it's going to be quite difficult."

Electricity costs are 2.4 times higher...difficult to pass on costs

In some cases, companies are unable to sufficiently pass on the rising costs of raw materials and energy to their products.

At a metal processing manufacturer in Zama City, Kanagawa Prefecture, which produces parts for trucks and other products, with approximately 60 employees, rising prices for raw materials such as steel and stainless steel, as well as rising electricity costs for operating production equipment, are putting pressure on profits.

Of these, the purchase price of raw materials has nearly doubled compared to three years ago, but we have been able to pass on the price to the products while gaining the understanding of our business partners.

On the other hand, it is said that it is the increase in electricity bills that is difficult to pass on to the price.

This is because, unlike raw materials, it is difficult to calculate the increase in electricity bills for each product.

Until now, we have absorbed the costs ourselves because we could not explain clearly to our business partners and could not obtain their understanding.

However, the monthly payment for electricity was 1.68 million yen in November 3 years ago, but it rose to 4.1 million yen in November last year, a 2.4-fold increase.

Last month, they introduced cutting-edge processing machinery that consumes half the power of conventional machines, and are working to save electricity, but they say they are approaching their limits.

Soichiro Akahara, president of "Akahara Seisakusho," said, "For steel materials, we have been able to pass on the price, but it is difficult to explain the electricity bill because it is difficult to give a specific cost for each product. Various costs are rising. However, raising labor costs is a very high hurdle, and I would like the government to properly recognize the current situation."

"Corporate Goods Price Index" hits all-time high

Against the backdrop of rising raw material prices and other factors, the prices of goods traded among companies continue to rise.

Last month, the Bank of Japan announced on the 16th that the corporate goods price index for December rose 10.2% from the same month of the previous year.

The index was 119.5 with the 2020 average of 100, a record high for the ninth consecutive month, and price increases are progressing for a wide range of items.

According to the Bank of Japan, out of the 515 items targeted, 454 items, or 88%, have increased in price, and there is a growing movement among companies to pass on the increase in raw material costs to sales prices.

On the other hand, the "consumer price index" rose 3.7% in the index excluding fresh food in November last year.

This is also the first record high price in about 41 years, but there is a large gap with the rate of increase in corporate goods prices.

This difference indicates that companies may not be able to pass on the increase in purchasing costs of raw materials, etc. to selling prices.

For this reason, there is a possibility that the trend of passing on these costs to selling prices will accelerate further in the future.

Future Trends What do the experts say?

[Q&A]

Will these trends continue?

We asked Fellow Chief Economist Yuichi Kodama of Meiji Yasuda Research Institute.

Q. Why is the Corporate Goods Price Index continuing to grow at a high rate?

A. Last year, the yen depreciated rapidly, but companies have not yet been able to sufficiently pass on the increased costs of raw materials and fuel to their own products.

This is the reason behind the continuing upward trend.

Q. The rate of increase is higher than the consumer price index.

How should we look at this difference?

A. The rate of increase in corporate goods prices is far greater, and this is a factor that puts pressure on corporate earnings.

When it comes to the consumer level, the price competition is so fierce that companies are reluctant to raise prices when consumer wages are not rising.

Q.Will the price pass-through be further advanced in the future?

A. If you raise prices all at once, it will lead to the loss of consumers, so the same items are repeatedly raised once every few months.

I think this trend will continue for a while, and I think the situation will continue to put pressure on consumers' pockets.

However, given that the surge in crude oil prices, which had been a major factor behind the rise in corporate goods prices, has already calmed down, and that the yen is depreciating recently, it is likely that the rate of increase in corporate goods prices will peak soon. I feel

Unless the yen depreciates again and crude oil prices rise again, the rate of increase in consumer prices will slow down in the second half of this year.