Rushing Demands

Hastened by coming higher rate of consumption tax, consumers are rushing in shops. Cars, houses or electric devices are typical targets of them. The makers are enjoying unusually large amount of sales. This phenomenon represents a character inherited in the Japanese: all players rush to one soccer ball regardless each of them is defense, mid-fielder or forward. It seems to be inevitable for Japanese economy to suffer from steep down after the tax rate is raised in April.

Sales of new cars marked 29.4% of increase in January, compared with the same month last year. Light motor vehicles, with capacity of 660cc or less, sold two hundred thousands, with 32.1% increase, making new record of January sales. It is not only about cheap cars, but also about luxury ones. Mercedes Benz Japan enjoyed about 70% increase last month. Peak of rushing demands came earlier than their expectation.

Electrical appliances are also showing big sales. Bic Camera had sold as many refrigerators and washing machines as fifty percent more than in the same month last year. Beds and mattresses are selling well with discounted prices. Housing starts through last year were 983 thousands, 11% of increase from the year before. Positive purchase of houses encourages consumers for electrical appliances and furniture.

Profits of manufacturers are getting high. Panasonic marked 4.4% increase in its total sales, with record-high net profits, from April to December last year. Toyota released upward adjustment of sales profit of the settled account in March 2014, which amounted to new record of ¥2.4 trillion. Not only positive purchase but also low rate of Japanese yen contributed to Toyota’s big sales.

Food makers are increasing their production. Kirin Beer Brewery is increasing supply of Ichiban by 20% in March. Retailers are expecting surge in consumption for soy sauce, miso or mayonnaise.

It is important for the makers to correctly examine consumers’ moves. If they miscalculate the potential purchase, they will have to face a great amount of bad inventories. However, no one can exactly find out how big the impact of consumption tax hike in April will be. Negative impact from emerging economy may bring damages on exporters. Nikkei Average in Tokyo Stock Market showed major decline on Tuesday, caused by weakness of other overseas markets worrying about slumps in emerging economies. One cannot ignore the possibility of getting this positive trend of Japanese into vicious cycle of low consumption, low production, and low wages.