TOKYO, Nov 24 (News On Japan) - The steady rise in food prices in Japan has become unmistakable, with some items increasing by as much as 10% in September 2025, yet the overall consumer price index shows growth of only around 3%, leaving many wondering why the gap is so large and whether official data truly reflects the burden households feel.
According to the Ministry of Internal Affairs and Communications, the nationwide consumer price index excluding fresh food rose 2.9% in September from a year earlier, up 0.2 points from August’s 2.7% and marking the first acceleration in four months. Continued increases in staple foods, including rice, were the main contributors to the rise.
At the same time, households have been confronted with far steeper increases in specific items; in September, some frozen foods jumped by 10%, prompting the question of why the CPI shows only a 2.9% rise. To understand the discrepancy, JP Morgan Securities Chief Economist Ayako Fujita explains that the CPI is calculated based on the average spending patterns of households, with each category weighted according to its share of household expenditure. Food accounts for roughly 25% of the current CPI basket, meaning that even sharp increases in food prices are diluted when categories with smaller increases—or declines—are included.
A significant reason for these declines lies in government subsidies. Since 2023, the government has provided energy subsidies, and discussions are ongoing regarding reductions to the gasoline surtax. These measures have pushed down prices for gasoline and other energy-related items, exerting downward pressure on the CPI. Free high school tuition has also had a substantial negative impact on the education index, while reductions to childcare fees for second and subsequent children in Tokyo have similarly weighed on overall inflation.
The latest September 2025 CPI data illustrates the difference clearly: while food prices were up from a year earlier, education-related costs fell by nearly 10%, reflecting the effects of high school tuition waivers. Energy subsidies also continued to lower fuel prices, with the government providing 15 yen per liter in support for gasoline and diesel to petroleum wholesalers.
Other government measures, such as distributing rice vouchers or shopping coupons, can influence household spending but do not directly affect the CPI unless they alter the actual retail prices of goods. Fujita notes that cash handouts or coupon-style benefits do not change the index because they do not modify listed prices, meaning that CPI remains unaffected even if households feel some relief in their budgets.
While inflation continues to rise, wages have not kept pace. In a typical economic cycle, price increases are followed by wage growth, which eventually outstrips inflation as productivity improves. However, Fujita warns that Japan is stuck in a pattern in which wages rise but inflation remains persistently higher, preventing real earnings from improving and squeezing household finances. As long as pay increases fail to outpace rising prices, households will continue to feel pressure and may ultimately reduce discretionary spending.
If wage growth does not begin to exceed the pace of inflation, more consumers may find themselves cutting back on everyday purchases, deepening the strain on household budgets.
Source: テレ東BIZ
