Breadies grapple with rising costs

A bakery shop in Tokyo's Arakawa Ward displays a notice that it will keep current prices of bread and pastries. Kaho Matsuda It all comes down to dough. The rise in materials prices over the past year or so is weighing heavily on bakeries, along with the sharp depreciation of the yen in recent months.

The operators have done their utmost to avoid passing on increases in the cost of raw materials for fear of losing customers, but they are fast reaching the point of no longer being able to do so.

The question in the minds of many businesses is what price can they get away with without risking customer ire. There are few options that seem palatable.

The consumer price index for May rose by 2.1 percent from the same month in 2021, for the second consecutive month in a row, and there are fears that it will continue to rise as more price waves of goods seem to be in the offing for the rest of the year.

Yoshio Sudo, who runs a long-established bakery shop in Tokyo s Arakawa Ward, said he has kept the price of fried bread at 160 yen $1.20 and filled and stuffed bread items at between 200 yen and 250 yen for more than 30 years.

Even when the rate of consumption tax was raised, he did not increase his prices in order to not turn off customers.

In March, the purchase price of wheat jumped by nearly 20 percent, and cooking oil costs almost twice as much as three years ago, he said.

Sudo, 65, said raising prices by 10 -- 20 yen would be meaningless. He reckons that an additional 50 yen or 80 yen per item would offset his increased costs.

He said that bread with such a high price tag will not sell for sure.

Sudo is keeping his prices the same for the time being.

He knows it is only a matter of time before he has to raise his prices if there is an additional 10 -- 20 percent increase in the cost of materials.

The CPI's growth is moderate compared to that of the corporate goods price index CGPI, which surged by 9.1 percent in May from the same month in 2021.

The CGPI gauges prices for goods that Japanese companies charge each other, based on domestic wholesale prices.

According to corporate research company Teikoku Databank Ltd., shop operators are by and large absorbing steep increases in costs to retain their customer bases because of the modest increase of the CPI.

Some bakery shops have raised prices to ride out of the hard times.

A bakery in the capital's Koto Ward sold a loaf of bread at 480 yen in April, up from 430 yen previously.

The shop assistant said that the sales had dropped by about 20 percent since the novel coronaviruses hit in 2020, and that was unavoidable. The situation is now worsened by the significantly weaker yen.