How long will the rising prices of "food," "electricity and gas," and "gasoline" continue in the corona?

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How long will the rising prices of "food," "electricity and gas," and "gasoline" continue in the corona?

Recently, the prices of daily necessities are rising one after another. The background is the movement of companies in anticipation of the economic recovery after the corona, but there is also the fact that the Japanese are losing due to the stagnation of the Japanese economy. Many believe that the sharp rise in prices will subside, but many believe that inflation will continue. How can we Japanese defend our lives?

Economic commentator Keiichi Kaya

Economic commentator Keiichi Kaya

Keiichi Kaya Economic commentator Born in Sendai City, Miyagi Prefecture in 1969. After graduating from the Department of Nuclear Engineering, Faculty of Engineering, Tohoku University, he joined Nikkei BP as a reporter. He changed to an investment fund management company of Nomura Securities Group and is in charge of corporate evaluation and investment business. After he became independent, he engaged in consulting work for central ministries and government-affiliated financial institutions. Currently, he is writing in various fields such as economy, finance, business, and IT. His books include "Poor Country Japan" (Gentosha Shinsho), "The Road to Millionaires is in Economics" (Cross Media Publishing), "Feeling Economics" (SB Creative), and "Post-New Industrial Revolution". (CCC Media House), "Study of the New Wealthy Class-A New Mechanism to Change the Japanese Economy" (Shodensha New Book), "The Essentials of War and Economy I Want to Learn as a Culture" (Comprehensive Law Publishing).

1. Price increases for food, electricity / gas, and gasoline
2. The world is starting to move towards a block economy
3. Reasons why prices will continue to rise
4. How to counter inflation

Price increases for food, electricity / gas, and gasoline

It has become clear that electric power companies will raise their electricity prices in October. Four major city gas companies are also expected to raise prices, and electricity and gas prices will rise for the second consecutive month. Electricity charges are basically linked to the prices of liquefied natural gas (LNG) and coal, which are fuels for thermal power generation. Due to the recent rise in crude oil prices and LNG prices, it has been decided to raise prices one after another. In fact, electricity and gas companies are struggling to increase costs. Crude oil prices have risen 1.7 times over the past year, and LNG prices have quadrupled in some regions. Coal prices have risen as well, more than doubling. It's not just energy. Food prices are also rising, and food manufacturers are in a difficult situation. Coffee beans are 1.4 times more expensive, cotton is 1.4 times more expensive, palm oil is 1.7 times more expensive, soybeans are 1.6 times more expensive, sugar is 1.4 times more expensive, wheat is 1.4 times more expensive, and so on. is. For example, coffee product manufacturers use coffee beans as raw materials for various processing, but coffee products are still offered to consumers in a form that is as close to the raw materials as possible. For this reason, the ratio of cost to the added value of products is high, and soaring raw material costs directly hit the profits of manufacturers. Each company plans to raise the price by 20% in the fall. The price of coffee has been rising for a long time, and manufacturers have been eager to maintain the quality, but this is also reaching its limit. There are an increasing number of cases where products in the same price range are stopped and new products with slightly lower quality are offered as successors, and it is becoming impossible to continue the same products. The price of cooking oil has already risen since August due to soybean prices, and the price of margarine and other oils will rise by up to 10% or more from October. Similarly, many manufacturers have announced that they will raise the price of pasta and soba in response to the rise in the price of wheat flour. Naturally, the price of gasoline is linked to the price of crude oil, so it has been rising almost every month since the end of last year. As is well known, in Japan, so-called stealth price increases, which keep prices unchanged and reduce content, are rampant, and at first glance it may seem that prices have not increased, but this is a fine price increase. And since the stealth price increase has finally reached its limit, some manufacturers have decided to raise the price in earnest.

The world is starting to move towards a block economy

So is the series of price increases temporary? The sharp rise in prices of primary products is likely to stop, but the long-term trend is that prices are likely to continue rising. The reason is the structural transformation of the world economy triggered by the corona crisis. At this point, prices of commodities are rising because companies are stepping up their supply of raw materials in preparation for the post-Corona economic recovery, and there is a battle for materials. When the production and transportation of raw materials were tight due to the corona crisis, orders flooded from each company, and the price soared. Then, if the corona crisis is over, it will not be completely restored to its original state. The reason is that the corona crisis has led to an active movement to review traditional supply chains. In the past, companies were building a wide range of supply chains around the world in search of a low price of even one yen. But the outbreak of the Corona crisis has forced these extensive supply chains to be reviewed.Related article

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Companies have come to consider supply chains that are too large as risks, and there is a marked tendency to narrow the scope of procurement to the neighborhood. The recent conflict between the United States and China has reduced trade between the two sides, and China has strengthened its transactions with the Asian region, but the move is not solely due to political conflict. The entire world economy is increasing its neighborhood procurement ratio, and the economy is becoming more blocked, and the US-China conflict can be seen as part of that trend. In the future, what is consumed in Asia will be more likely to be procured in the Asian region, and what can be domestically produced in Japan will be more likely to be domestically produced. This has a positive effect on the stable supply of goods, but it definitely puts upward pressure on prices. In other words, the price of goods is likely to continue to rise in the future. [Next page] Reasons why prices will continue to rise

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