SPOTLIGHT JAPAN

Japan’s household food spending the highest for 20 years as ready-to-eat sales rocket

23-Feb-2017 - Last updated on 23-Feb-2017 at 06:55 GMT

Household spending on food as a percentage of total monthly expenditure is increasing. It remains to be seen, however, if consumers will splash the cash on Megmilk's coffee butter.

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Japan’s households are spending less the across the board each month, but the amount forked out on food products has hit a 20-year high.

The percentage of total monthly outlay being splashed out on food now stands at its highest level since 1987, according to new government data.

For households of two or more people, food spending increased by 0.8 percentage points to 25.8% of the total monthly cost base.

However, total monthly spending per household has been falling since 2013 and now stands at 282,188 yen ($2,501), a 1.7% drop in real terms.

Analysts say the weak currency has increased the cost of raw materials making manufactured products more expensive.

The rise in household food spending is overwhelmingly been driven by working households, which posted a 6% hike.

It has been reported that spending on ready-to-eat food has been particularly strong, growing by 4.5%.

Consumers in Japan are also bearing the brunt of increased import costs, which manufacturers and retailers are passing on to preserve margins.

Dairy products in particular have been rising sharply in the past few months. Cheese imports, which accounts for 90% of the market, have rocketed by between 20 to 30% in the last six months.

Meanwhile butter prices have jumped by 50% in the last year. Any likelihood of an immediate reduction is remote, due to both currency factors and exporters cutting supplies of raw milk.

According to former Bank of Japan board member Sayuri Shirai, the rise in food prices was hitting consumer spending in other sectors, something the country’s sluggish economy can ill afford.

"Households are very sensitive to the prices, the general prices and especially food prices," she told CNBC this week.

"So this past most recent quarter, you saw the consumption growth was very sluggish. It's because food prices went up. Whenever food prices go up, the consumers feel their disposable income is going down. So they'd rather reduce the consumption."

More stories from Japan...

Hokkaido seeks to boost Middle East food exports and shines spotlight on Halal beef

With just 0.7% of Japan’s total food exports going to the Middle East, food industry and trade representatives from Hokkaido have been trying to drum up interest in Abu Dhabi.

Hokkaido government officials, the Hokkaido Food Industry Promotion Organisation and the Japan embassy recently hosted the Hokkaido Food Fair at the Ambassador of Japan to the UAE Kanji Fujiki's residence.

They showcased Hokkaido halal beef, ramen seafood and confectionery to guests, including Dr Rashid Mohammad Al Shariqi, Director General of Abu Dhabi Food Control Authority.

According to the Japan External Trade Organisation (JETRO), Japan’s food exports to the UAE stood at $51m in 2016.

And despite recoding significant growth in halal beef and food ingredients, this stands at just 0.7% of the country’s total global exports.

Furthermore, more than half of the exports to the UAE are carbonated beverages, leaving plenty of scope for growth in other sectors.

Ryosuke Kobayashi, executive vice-president of the Hokkaido Food Industry Promotion Organisation said he was optimist of the region’s future export potential.

"We have been working in the Middle East for the past five years and this is our very first food fair in Abu Dhabi. We want to introduce and promote the splendour of Hokkaido food products to the UAE," he added.