TOKYO- It was a chocolate biscuit that turned Masayuki Iwasa, a self-professed penny-pincher with a sweet tooth, into one of Japan’s most scrupulous chroniclers of “shrinkflation”.
Having sworn off his favorite Chocoliere tartlets for a decade after Bourbon Corp 2208.T reduced the package size, the newspaper delivery man and part-time stock trader was spurred to action around two years ago after he noticed the biscuits had also gotten smaller.
“I was annoyed they were shrinking and shrinking,” said the 45-year-old Iwasa, whose website, www.neage.jp (price increases), documents surreptitious price hikes.
Today he tracks prices of some 400 goods and services – everything from washing powder to day passes at Tokyo Disneyland. The bulk of his website is devoted to so-called shrinkflation, when a product gets smaller but the price stays the same.
“In Japan, the impact of deflation means it is difficult to raise prices directly, so shrinkflation is a kind of a measure of last resort,” Iwasa said. “But basically it’s sneaky and it bothers me.”
While the practice is hardly unique to Japan – Mondelez International Inc sparked a global outcry when it reduced the size of the Toblerone chocolate bar in 2016 – its prevalence in the world’s No.3 economy is a notable legacy of years of deflation.
Because consumer prices and wages barely budged for the last two decades, companies have become reluctant to increase prices for fear of losing customers.
That’s a headache for policymakers, who ultimately want to see higher prices that are an essential component to a virtuous spending cycle that drives economic growth, especially as the population ages and declines.
There are now signs that even Japan Inc may be nearing a tipping point, as soaring raw material costs and a weak yen drive up what companies pay for fuel, coffee beans and beef.
While only 14 percent of Japanese firms have so far passed on higher costs to customers, another 40 percent say they plan to, a recent Reuters poll showed.
Yet food companies are among the least willing to pass on costs, the survey showed, reflecting their fear of alienating shoppers.
“As the price of raw materials increases, food manufacturers would like to raise prices but it is difficult for them to do that,” said Tsutomu Watanabe, an economics professor at the University of Tokyo.
