Concerns Over Inflation Due to Rising Raw Material Costs... 84% of Japanese Companies Plan Additional Price Increases by Year-End

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[Asia Economy Reporter Jeong Hyunjin] More than 8 out of 10 Japanese companies have either raised or are considering raising the prices of their products and services by the end of the year, taking into account the rapidly rising inflation this year. Although concerns about a global economic slowdown have somewhat eased, the rise in raw material prices remains a source of worry for companies.

On the 8th, Nihon Keizai Shimbun reported and analyzed the results of a survey conducted from the 16th to the 30th of last month targeting 143 companies in Japan. According to the report, 94.0% of Japanese companies responded that the procurement costs for energy, raw materials, and finished products would increase compared to last year. Among them, 42.0% said the increase would be "10% or more but less than 20%," which was the largest group, and 12.0% said "20% or more but less than 30%."

When costs rise like this, companies raise the prices of their products or services. 74.0% of the respondent companies said they have raised the prices of their main products and services this year. However, among them, 86.7% believed that the price increases were still "insufficient." Accordingly, the overall response rate of companies that plan to raise or consider raising the prices of their main products and services by the end of this year was high at 84.3%.

Regarding the current global economic situation, 46.1% of Japanese companies responded that conditions are holding steady. The response rate for moderate growth was 34.3%, an increase of 8.8 percentage points compared to the survey conducted in March. In the previous survey conducted three months ago, about 40% of respondents said the economy was deteriorating due to Russia's invasion of Ukraine, but this has dropped to the 20% range this time.

Regarding the sharp depreciation of the yen in the first half of this year, manufacturers have been confirmed to view it positively. About 70% of manufacturers responded that it would be a "plus" for their business. Although the market evaluates this as a "bad yen depreciation" that only fuels inflation without producing positive effects, companies interpret it as advantageous for their performance because it increases price competitiveness in export markets.

This content was produced with the assistance of AI translation services.