Inflation clouds Christmas shopping season

Slices of cakes are boxed at an Osaka confectionery that has raised the prices of its Christmas confections this year.- The Yomiuri Shimbun

Surging prices of ingredients such as flour, and packaging materials have triggered inflationary clouds this holiday shopping season, with Christmas cakes, game consoles and toys more expensive this year.

Concerns have been raised about the impact on consumption in a shopping season that has also seen illumination events scaled down to conserve electricity.

Donguri, a confectionery in Katsushika Ward, Tokyo, has increased the prices of its Christmas cake by up to ¥300 compared to last year, with one popular cream confection adorned with a Santa Claus figure now costing ¥3,800, including tax.

“We had to raise prices, as costs have gone up for most of the ingredients necessary for baking, such as flour, cream and butter,” the store manager said.

As costs are expected to continue rising, “We have no choice but to think about raising prices of other cakes as well,” the manager said.

According to a Teikoku Databank Ltd. survey of 100 companies, including operators of convenience stores, department stores and confectionery shops nationwide, the average price of a Christmas cake has increased by 5.5 percent to ¥4,040, ¥209 higher than last year.

Among the companies surveyed, 80 percent had raised the prices of products, amid surging costs of packaging materials, electricity and gas, among other things.

“To make a profit, there is no other alternative but to increase prices,” said a source in the confectionery industry.

Inflation has also impacted the prices of popular Christmas gifts such as game consoles and toys.

Sony Interactive Entertainment LLC has raised the suggested retail price of the disk-drive PlayStation 5 console by 10 percent to ¥60,478. Tomy Company Ltd. has increased prices by an average of 10 percent for 331 products, including toy train products and Licca dolls, and Bandai Co. has increased prices of its Ultraman dolls, among other products.

Christmas-related events have also been impacted. The organizer of a seasonal illumination event in Sendai reduced the number of lights in the event to 470,000, compared to the 600,000 it used before the pandemic, citing the rising cost of LED bulbs and installation.

Meanwhile, an illumination event in Tokyo’s Shibuya Ward kicked off about a week later than usual and will end on Dec. 25 instead of continuing through the end of the year. Ao no Dokutsu Shibuya, which started on Dec. 8, is being held for the first time in three years following cancellations due to the pandemic.

Christmas-related sales are expected to be worth about ¥1.95 trillion, up 9.4 percent from the previous year, according to research firm Intage Inc.

With no strict pandemic measures in place, more people are expected to go out during the holiday season, but it remains to be seen whether this will lead to an increase in consumption.