Rice, a staple in Japan and an integral part of the country’s culture, tradition and politics, has turned into a pain point for the nation. A rice crisis has gripped the nation for nearly a year with soaring prices and empty supermarket shelves, but it is showing tentative signs of easing. New data from the Ministry of Agriculture, Forestry and Fisheries revealed that average rice prices fell below the psychologically significant 4,000-yen mark for the first time since early March, offering hope to consumers long frustrated by the soaring cost of a dietary staple.&nbsp; According to the ministry, a five-kilogram bag of rice sold for an average of 3,920 yen ($27.03) during the week ending June 15, a 256-yen drop from the previous week. This marks the first time in over three months that prices have entered the 3,000-yen range, a goal Prime Minister Shigeru Ishiba had pledged to achieve by the end of June.&nbsp; “This drop is a result of the government’s clear intervention and strategic release of rice reserves,” said Farm Minister Shinjiro Koizumi. Blended rice, which includes rice from government stockpiles, now accounts for half of the market share, up 6 percentage points, helping stabilise supply. Retailers have also started offering imported rice from countries like the US and South Korea. Supermarket chain Aeon began selling California-sourced rice in early June, while South Korean firm The O Global signed a deal to export 200 tonnes of rice, the largest ever by a South Korean private company, to Japan.&nbsp; Still, the recovery remains uneven. Smaller stores around Tokyo continue to report shortages, while some chains and regional outlets have resumed regular stock levels. The National Supermarket Association confirmed to CNBC that although the shortage appears to be easing, “there is no stock of reasonably priced rice,” suggesting the crisis isn’t over yet.&nbsp;<h2> Behind the shortage: Panic buying, poor harvest, and tourist demand</h2>&nbsp; The roots of Japan’s rice crisis are multifaceted. Prices began rising sharply in late 2024, primarily driven by a poor harvest in 2023 attributed to unseasonably hot weather and pest infestations. The situation worsened as demand surged, in part due to increased tourism and a rise in rice consumption spurred by rising prices of bread and noodles amid the global wheat crisis following the Russia-Ukraine war.&nbsp; Public anxiety spiked further in mid-2024 after a widely circulated warning about a potential “megaquake” led to nationwide panic buying. The top-tier “Koshihikari” brand began selling rice for nearly 5,000 yen ($35) per 5 kg, and the average household faced prices nearly double those seen the year before. At one point, rice stockpiles at commercial wholesalers dipped 400,000 tonnes below 2023 levels, hitting a record low of 1.53 million tonnes.&nbsp; Making matters worse was the government’s delayed release of emergency reserves and structural inefficiencies in Japan’s rice supply chain. The powerful Japan Agricultural Cooperatives (JA), which dominate rice sales, were caught off guard by the crisis.&nbsp;&nbsp; Meanwhile, the government has faced criticism for failing to track stock levels accurately due to a growing share of rice being sold outside traditional JA channels. The lack of a centralised tracking mechanism and logistical challenges like insufficient milling capacity to convert brown reserve rice into polished white rice only added to consumer frustration.&nbsp;<h2> Still high, still uneven</h2>&nbsp; Although prices have begun to decline, the fall has been modest. Core consumer prices in May rose by 3.7 per cent from a year earlier, with rice prices spiking by a staggering 101.7 per cent, the largest jump in over 50 years. Analysts note that branded rice prices have only just started to dip, suggesting that issues beyond simple supply-demand imbalances may be at play.&nbsp; Many consumers are also sceptical about the quality of rice being released. Government reserves often consist of older stocks, with terms like “ko-ko-komai” or “old-old-old rice” used to describe some batches. Freshly harvested “shinmai” rice is prized in Japan for its taste and texture, and older rice is seen as less palatable.&nbsp; To prevent hoarding and profiteering, authorities on June 23 implemented a ban on reselling rice bought at retail stores. Offenders now face up to one year in prison or a fine of up to 1 million yen. Despite these moves, Prime Minister Ishiba has admitted in parliament that the government still lacks full clarity on the current rice inventory, acknowledging that “structural problems” in Japan’s rice policy must be addressed. Bank of Japan Governor Kazuo Ueda echoed a cautious optimism, stating, “We expect such pressures to dissipate,” noting that while inflation remains elevated, it is being driven in part by temporary shocks like rice and import costs.&nbsp;(With inputs from agencies)

New data from the Ministry of Agriculture, Forestry and Fisheries revealed that average rice prices fell below the psychologically significant 4,000-yen mark for the first time since early March, offering hope to consumers long frustrated by the soaring cost of rice.

Rice, a staple in Japan and an integral part of the country’s culture, tradition and politics, has turned into a pain point for the nation. A rice crisis has gripped the nation for nearly a year with soaring prices and empty supermarket shelves, but it is showing tentative signs of easing. New data from the Ministry of Agriculture, Forestry and Fisheries revealed that average rice prices fell below the psychologically significant 4,000-yen mark for the first time since early March, offering hope to consumers long frustrated by the soaring cost of a dietary staple. According to the ministry, a five-kilogram bag of rice sold for an average of 3,920 yen ($27.03) during the week ending June 15, a 256-yen drop from the previous week. This marks the first time in over three months that prices have entered the 3,000-yen range, a goal Prime Minister Shigeru Ishiba had pledged to achieve by the end of June. “This drop is a result of the government’s clear intervention and strategic release of rice reserves,” said Farm Minister Shinjiro Koizumi. Blended rice, which includes rice from government stockpiles, now accounts for half of the market share, up 6 percentage points, helping stabilise supply. Retailers have also started offering imported rice from countries like the US and South Korea. Supermarket chain Aeon began selling California-sourced rice in early June, while South Korean firm The O Global signed a deal to export 200 tonnes of rice, the largest ever by a South Korean private company, to Japan. Still, the recovery remains uneven. Smaller stores around Tokyo continue to report shortages, while some chains and regional outlets have resumed regular stock levels. The National Supermarket Association confirmed to CNBC that although the shortage appears to be easing, “there is no stock of reasonably priced rice,” suggesting the crisis isn’t over yet. Behind the shortage: Panic buying, poor harvest, and tourist demand The roots of Japan’s rice crisis are multifaceted. Prices began rising sharply in late 2024, primarily driven by a poor harvest in 2023 attributed to unseasonably hot weather and pest infestations. The situation worsened as demand surged, in part due to increased tourism and a rise in rice consumption spurred by rising prices of bread and noodles amid the global wheat crisis following the Russia-Ukraine war. Public anxiety spiked further in mid-2024 after a widely circulated warning about a potential “megaquake” led to nationwide panic buying. The top-tier “Koshihikari” brand began selling rice for nearly 5,000 yen ($35) per 5 kg, and the average household faced prices nearly double those seen the year before. At one point, rice stockpiles at commercial wholesalers dipped 400,000 tonnes below 2023 levels, hitting a record low of 1.53 million tonnes. Making matters worse was the government’s delayed release of emergency reserves and structural inefficiencies in Japan’s rice supply chain. The powerful Japan Agricultural Cooperatives (JA), which dominate rice sales, were caught off guard by the crisis. Meanwhile, the government has faced criticism for failing to track stock levels accurately due to a growing share of rice being sold outside traditional JA channels. The lack of a centralised tracking mechanism and logistical challenges like insufficient milling capacity to convert brown reserve rice into polished white rice only added to consumer frustration. Still high, still uneven Although prices have begun to decline, the fall has been modest. Core consumer prices in May rose by 3.7 per cent from a year earlier, with rice prices spiking by a staggering 101.7 per cent, the largest jump in over 50 years. Analysts note that branded rice prices have only just started to dip, suggesting that issues beyond simple supply-demand imbalances may be at play. Many consumers are also sceptical about the quality of rice being released. Government reserves often consist of older stocks, with terms like “ko-ko-komai” or “old-old-old rice” used to describe some batches. Freshly harvested “shinmai” rice is prized in Japan for its taste and texture, and older rice is seen as less palatable. To prevent hoarding and profiteering, authorities on June 23 implemented a ban on reselling rice bought at retail stores. Offenders now face up to one year in prison or a fine of up to 1 million yen. Despite these moves, Prime Minister Ishiba has admitted in parliament that the government still lacks full clarity on the current rice inventory, acknowledging that “structural problems” in Japan’s rice policy must be addressed. Bank of Japan Governor Kazuo Ueda echoed a cautious optimism, stating, “We expect such pressures to dissipate,” noting that while inflation remains elevated, it is being driven in part by temporary shocks like rice and import costs. (With inputs from agencies)

New data from the Ministry of Agriculture, Forestry and Fisheries revealed that average rice prices fell below the psychologically significant 4,000-yen mark for the first time since early March, offering hope to consumers long frustrated by the soaring cost of rice.

Japan’s rice crisis eases as prices dip and stocks return to shelves

Japan’s consumer prices have surged to the fastest pace in two years, placing economic pressure firmly at the centre of the country’s upcoming upper house election.&nbsp;&nbsp;The rise in costs, led by a sharp increase in food prices, especially rice is expected to shape both political and monetary decisions in the weeks ahead.&nbsp;As per Japan’s Ministry of Internal Affairs, core consumer prices (excluding fresh food) rose 3.7 per cent in May from a year earlier. This marks the third consecutive monthly acceleration and the fastest pace since January 2023, exceeding the 3.6 per cent median forecast of economists surveyed by Bloomberg.<h2>Japan’s inflation trend</h2>The latest inflation figure is in line with a broader upward trend in prices observed over the past year. Government data shows that core CPI had eased temporarily in 2023, but began rising again in late 2024 due to cost pressures from food, energy, and imports. The current 3.7 per cent figure is the highest since January 2023, as visualised in the chart below.&nbsp;

<figure class="table"><table><tbody><tr><td>Month-Year</td><td>CPI YoY (%)</td></tr><tr><td>Sep 2022</td><td>~1.8</td></tr><tr><td>Dec 2022</td><td>~3.9</td></tr><tr><td>Jan 2023</td><td>4.0</td></tr><tr><td>Mar 2023</td><td>~3.4</td></tr><tr><td>Jun 2023</td><td>~3.2</td></tr><tr><td>Sep 2023</td><td>~2.9</td></tr><tr><td>Dec 2023</td><td>~2.4</td></tr><tr><td>Mar 2024</td><td>~2.6</td></tr><tr><td>Jun 2024</td><td>~2.9</td></tr><tr><td>Sep 2024</td><td>~2.6</td></tr><tr><td>Dec 2024</td><td>~3.1</td></tr><tr><td>Mar 2025</td><td>~3.5</td></tr><tr><td>May 2025</td><td>3.7</td></tr></tbody></table></figure>&nbsp;Source: Japan’s Ministry of Internal Affairs

The steady rise from late 2024 indicates that underlying inflationary pressure is gaining traction, supported by food and energy costs, and amplified by the pass-through of higher import prices to consumers.<h2>Food prices in focus</h2>The biggest contributor to inflation remains food, particularly rice, Japan’s staple food and a politically sensitive commodity. According to the government data, rice prices jumped 102 per cent year-on-year, amid ongoing supply disruptions and concerns about stockpiling.&nbsp;The food crisis has added urgency to government responses. Prime Minister Shigeru Ishiba’s administration, facing re-election in July, has already announced cash handouts to offset the impact of rising living costs. Meanwhile, opposition parties are calling for Japan’s first-ever cut to the national sales tax.&nbsp;As quoted by Bloomberg, Taro Saito, head of economic research at NLI Research Institute, said, “Japan’s inflation is strong, driven by food costs — rice prices are surging and it’s impacting other related items… Today’s data will leave little doubt that inflation will be the key agenda for next month’s election.”<h2>Political tension escalates</h2>The sharp price increases come just weeks before a scheduled upper house election on July 20, which could prove pivotal for Ishiba’s minority government.&nbsp;Rising living costs have already led to political setbacks. Last autumn, the ruling party faced its biggest electoral defeat since 2009. Recent polling by local Japanese media suggests Ishiba’s popularity is recovering, helped in part by recent government subsidies to stabilise grain prices.<h2>BOJ caught between growth and inflation</h2>The inflation data has also added weight to speculation that the Bank of Japan (BOJ) may soon raise interest rates. While the central bank held rates steady at 0.5 per cent earlier this week, the inflation figure has reinforced expectations of a shift.&nbsp;As quoted by Bloomberg Economics, “The hotter CPI print will probably strengthen the BOJ’s confidence that its 2% target is becoming secure… We expect the BOJ to raise its policy rate by 25 basis points to 0.75% at its July meeting.”&nbsp;However, BOJ Governor Kazuo Ueda has remained cautious. Speaking after the central bank’s decision to keep policy unchanged, Ueda said the BOJ would monitor the impact of oil prices and US trade policy before committing to another hike.&nbsp;Despite Japan’s core inflation remaining above the BOJ’s 2 per cent target for over three years, the central bank maintains that the underlying price trend is still below its sustainability threshold.<h2>Oil prices and US Tariff add more pressure&nbsp;&nbsp;</h2>Additional inflationary pressures may be emerging from abroad. A recent rise in global oil prices, triggered by tensions in the Middle East, could push Japanese input costs higher.&nbsp;Japan is particularly vulnerable to energy shocks due to its high dependence on imports. According to Bloomberg, major Japanese firms like Lotte and Meiji have already announced fresh rounds of price increases in June, three times higher than in the same period last year, citing rising costs.&nbsp;At the same time, Japan is also assessing the economic impact of new US tariff measures, a key factor BOJ officials say could influence their decision on when and how to normalise monetary policy.<h2>What next?</h2>While the May inflation print strengthens the case for a rate hike in July, analysts say much will depend on incoming data. Teikoku Databank reports that further food price hikes are expected in June.&nbsp;Meanwhile, economists quoted by Bloomberg expect core CPI to fall below 3 per cent by late summer, due to technical adjustments and recent government subsidies. (With inputs from the agencies) &nbsp;

This inflation spike is pivotal ahead of the upper house election on July 20, putting pressure on Prime Minister Shigeru Ishiba administration and prompting government cash handouts to mitigate rising living costs. 

Japan’s consumer prices have surged to the fastest pace in two years, placing economic pressure firmly at the centre of the country’s upcoming upper house election. The rise in costs, led by a sharp increase in food prices, especially rice is expected to shape both political and monetary decisions in the weeks ahead. As per Japan’s Ministry of Internal Affairs, core consumer prices (excluding fresh food) rose 3.7 per cent in May from a year earlier. This marks the third consecutive monthly acceleration and the fastest pace since January 2023, exceeding the 3.6 per cent median forecast of economists surveyed by Bloomberg. Japan’s inflation trend The latest inflation figure is in line with a broader upward trend in prices observed over the past year. Government data shows that core CPI had eased temporarily in 2023, but began rising again in late 2024 due to cost pressures from food, energy, and imports. The current 3.7 per cent figure is the highest since January 2023, as visualised in the chart below.

Japan's consumer prices have risen sharply, with a 3.7% increase in May, the fastest since January 2023, largely driven by food prices, particularly rice, which surged 102% year-on-year.

Japan’s inflation hits two-year high ahead of key election

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Japan’s rice crisis eases as prices dip and stocks return to shelves

Japan’s inflation hits two-year high ahead of key election