How Japan is shaking its price hike phobia

Consumers are less upset by rising prices

- MAKIKO YAMAZAKI TAKAHIKO WADA

When Japanese ice pop maker Akagi Nyugyo raised its prices a meagre ¥10 (about 2 baht) in 2016, its sombre-faced management appeared in a one-minute commercial, bowing silently in apology as a melancholy folk song lamented the inevitability of price hikes.

Almost a decade later, the Saitama-based company has changed its tune — a tongue-in-cheek advertising campaign last year promised in a series of photos to bow successively deeper for each of its next three price hikes.

The lighter-hearted spin comes as Japanese firms, after decades of deflation, find a rare moment that allows them to raise prices without triggering the intense public backlash that once made such moves taboo.

"Compared to when we raised prices in 2016, I'd say there’s more of a sense now that the public is more accepting of price hikes," the company’s marketing team leader Hideyuki Okamoto said. "The sentiment that price hikes are evil is receding."

That shift in consumer mindset is driven by the biggest pay hikes in three decades and has given companies more confidence to pass on rising costs — something they long avoided for fear of losing customers. If sustained, the change could embolden the central bank to further raise interest rates, though that is dependent on just how much more households can absorb.

The Bank of Japan is expected to keep its benchmark rates unchanged at this week's policy meeting but could signal its intention to resume rate hikes later in the year.