Key Facts
• March 2024: Nikkei 225 surpasses 40,000 points, reaching record highs in July.
• 2022–2024: Consumer sentiment remains stagnant despite rising stock prices.
• 2025: Inflation drives food and fuel costs higher, straining household budgets.
• Corporate sentiment improves, with non-manufacturing sectors reaching 1990s levels.
• Small and medium-sized enterprises show recovery, contrary to public perception.
• Companies regain pricing power, raising prices to offset costs and boost profits.
• Bank of Japan survey (March 2025): Predicted inflation at 2.5%, sales price growth at 2.9%.
Summary
Despite the Nikkei 225 reaching record highs in 2024, ordinary citizens in Japan face financial strain due to rising living costs. Consumer sentiment has not improved, with surveys showing limited optimism for future economic conditions. In contrast, corporate sentiment, particularly in non-manufacturing sectors like digital transformation and inbound tourism, has reached levels comparable to the early 1990s. Small and medium-sized enterprises also report improved conditions, challenging the narrative of widespread struggles. Companies have shifted strategies, embracing price increases to maintain profitability, marking a departure from decades of deflation-driven cost-cutting. This divergence between corporate and consumer experiences highlights the complexities of Japan’s current economic landscape.
