News analysis: Japan Is Shaking Off Its Fear of Price Hikes—But Can It Last?

Tolerance for higher prices could change as Trump tariffs threaten wage growth

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TOKYO — When Japanese ice pop maker Akagi Nyugyo raised its prices a meagre 10 yen (10 Singapore cents) in 2016, its sombre-faced management appeared in a one-minute commercial, bowing silently in apology as a melancholic folk song played in the background, lamenting the inevitability of price hikes.

Almost a decade later, the company has changed its tune — a tongue-in-cheek advertising campaign in 2024 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 companies, 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 with 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 had 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.