McDonalds Hikes Japanese Burger Prices By 20%

Tyler Durden's picture

As we have been warning for a while now, Japan wanted inflation and is certainly getting it, just in all the wrong places.

While Abe has been desperate to transfer the collapse in the yen and the (transitory) surge in the Nikkei to the all important increase in wages, and the much sought-after wealth effect, the reality is that corporate input costs are rising far faster than revenues, and wages will be the last thing profit and earnings-conscious companies raise.

As for the Japanese consumer, trained by 30 years of deflation, any profits in the stock market will be promptly converted to cold hard cash and bank deposits which represents that vast majority of Japanese financial assets, which means a double whammy for companies who will also see a drop in sales volumes, crushing margins even more as a result.

One company which could no longer tolerate soaring energy and food costs (both of which we described previously here and here), is McDonalds, and as the FT reports, the fast-food chain announced today that the price of its entry-level hamburger would increase by 20% from ¥100 to ¥120, while a cheeseburger would now cost ¥150 instead of ¥120.

This is the first price increase by McDonalds Japan, the largest corporate affiliate outside of the US which runs 3,300 local fast food restaurants, in five years. 

And now the Japanese, those few who have been trading stocks, and the vast majority who have not, will learn that there is no such thing as a free lunch, and the recent market gains will promptly transform into a sudden and violent 20%+ drop in purchasing power which in turn will manifest itself into surging fury for two entire generations that have never seen rising prices anywhere outside of textbooks.

“If prices go up, I will try to use coupons more and think more carefully what to order,” said Satomi Chiba, a 42-year-old part-time helper at a nursery, who takes her family of four to McDonald’s “two or three” times a month.

But those are problems of the 99%, and as such can be ignored. For now, the world's attention appears transfixed by the sudden surge of "wealth" (sadly wealthy is never merely diluted purchasing power) of the 1%.

Tokyo’s financial district has begun to buzz once more. One visiting banker said it took him eight minutes this week to find a taxi in a street normally lined with idling cabs.

Unfortunately, by now the bulk of the stock market gains have come and gone. And now it is up to everyone else, to pay the price.

Attention is switching to evidence of inflationary pressures building in the broader economy. While the weaker yen has caused costs for fuel and other imports to rise, many companies have so far been reluctant to lift their final prices, for fear of losing market share.

 

Tokyo Shimbun, for example, raised the newsstand price for its morning newspaper from Y100 to Y110 this month – the first increase in 16 years – but left the price of a monthly subscription unchanged.

Something tells us the Japanese BLS is hardly as proficient at "hiding" soaring food and energy prices as the US version. Which means rising inflation will be directly correlated with public anger and inversely so with the popularity of the Abe cabinet, something we discussed previously when we observed that according to Asahi, the favorable rating of Abe has already started to drop precipitously, tumbling to 60% from 71%. The longer the Abenomics experiment drags on, the lower this number will be until finally it hits the same level it did when Abe was forced to resign in disgrace the last time around.

Only this time he won't be able to blame his failure on another bout of explosive diarrhea.

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Smegley Wanxalot's picture

Price controls will now fix the problem in Japan.  They always work.

Scarlett's picture

Wealth effect  

 

Also, the Ben Bernake tag is missing

James-Morrison's picture

Wealth effect.

They need to call this one as it is:  Pull the wool over the sheeple's eyes. 

Blinder effect.  

Jacque Itch's picture

The Abe/Krugman monetary philosophy has a failure rate of 100% in all world history.  Are guys like this so arrogant that they think it will work if they "do it my way"?

Anusocracy's picture

I'd better buy a spare inflatable doll.

Manthong's picture

Two all beef patties, special sauce, lettuce, pickles cheese, onions on a sesame seed bun mo yen fo you mo fo.

Tanky yu..

Abe.

IBelieveInMagic's picture

Finally some good news for the much maligned Japanese people -- they have one more reason to avoid ingesting at least one form of toxic waste. They already get their daily dose of toxicity (Fuku, we have not forgotten you).

GetZeeGold's picture

 

 

Oh no.....there goes Tokyo!

Lost My Shorts's picture

Why does everyone say this is the Abe / Krugman monetary philosophy?  Isn't it just the standard medicine?

In the old days, whenever some profilgate developing company got into trouble with too much debt and hot money, the IMF would come in, and say tut tut tut, and demand devaluation of the local currency as a condition for a bail-out.  Japan is unique in not having much debt to foreigners, so they don't need an IMF bail-out, but otherwise isn't the Rx the same?  Japan has been living beyond its means on a river of debt, and needs to stop.  They must admit that they are not as wealthy as it seemed.  Devaluation of the currency forces people to buy fewer imports (lowering their standard of living of course, that is part of the treatment), and makes exports more competitive so the Japanese can do more of earning their way.  Standard medicine, no?

If not, what would you suggest that Japan do?

Scarlett's picture

gut 80% of govt, cancel all promises, default on the debt, let banks fail, let bankruptcies clean out the incompetent

fonzannoon's picture

Hey OT but WTF is this???

Wang Shiqiang, 60-year-old chairman of the board of supervisors for China Jianyin Investment Securities Co., appeared to have jumped to his death on the afternoon of April 16 from the top of the office tower that houses China Jianyin.

In an issued statement, China Jianyin said the suicide was due to personal issues in Wang’s life, refuting online speculation that the death was tied to heavy losses incurred by gold investments.

It is yet unclear how much risk exposure China Jianyin has to gold futures.

http://www.marketwatch.com/story/china-banker-jumps-to-death-in-beijing-2013-04-18?link=MW_home_latest_news

 

Manthong's picture

geez.. probably a paper guy way too wrapped up in the game..

not that it is such a bad end to an investment banker.

nmewn's picture

Fucking clowns...how apropos ;-)

New_Meat's picture

Bigu Macku was not so bad, back when, but the fries were done in fish-oil and sucked.  'course, that was back in the day when the US "Mackadonaldos" actually did fries that Julia Child called "the best in the world".

- Ned

{and, above is no-shit}

{{GI ;-)}

Freddie's picture

Fries done in Fukashima U235 oil.  Poor Japanese.  Nuked by Westinghouse twice then 4 times by Obama's General Electric scam company.

zorba THE GREEK's picture

I've got a yen for some Mickey D.

Manthong's picture

I hate to date myself, but for the kindred spirits..

I personally hauled 50 pound sacks of potatoes over to the peeling drum in one of the original mcD's then  insert individually into the manual arm press fry slicer, blanch them in a stainless steel sink, hang in stainless baskets, drain, dry, then deep fry,

They were indeed delish..

that was then...   when kids worked..   :-).

iDealMeat's picture

In Cali  "In n' Out Burger" still does that.. 

Delish indeed..

yogibear's picture

Bubble Bernanke and the Fed as well as Krugman want to print to infinity in the US.

The US fed is advising Japan so expect the same here eventually.

Wile-E-Coyote's picture

Jeees horse meat must be in demand!

A Lunatic's picture

I ate at McDonalds once, in 1989.

IridiumRebel's picture

The shit is still somewhere in your intestines too.......

TumblingDice's picture

You lunatic! Why would you do that?

JustObserving's picture

Maybe he felt suicidal that day. Or masochistic.  Or both.

HD's picture

How was your McDLT?  Was the hot side hot and the cool side cool?

IridiumRebel's picture

Kono hennii Ronodudo Makodunadudo arimasuka?

TumblingDice's picture

Must...destroy...middle class...everywhere.

spanish inquisition's picture

Damn, more bad news for silver and gold.

HD's picture

Yoo bery raciss.

You feel bad. You feel bad long time.

SILVERGEDDON's picture

We're SCREWED. Japanese will sic Godzilla on to us for jacking up the price of the glow in the dark Fuk - u - Mac.

Anusocracy's picture

I think it will be the Mothra Drones they will use.

Flagit's picture

i was just chomping at the bit to mention the big mac index.

saw it explained on tv one day, back when i used to watch. before internet was everywhere. guess it stands to reason there is a website.

now i download. same, but different. arrrggg.

NoDebt's picture

I'd rather have "Pennywise" from the Stephen King novel "IT" looking over my shoulder while I eat than that Japanese Ronald McDonald.  Distrurbing.

Manipuflation's picture

Get your ten percent "discount" burgers.

Dr. Engali's picture

It's transitory ... Kind of like McDonald's food.

A Lunatic's picture

Radiated meat ain't cheap..........

ziggy59's picture

...'cause real mystery meat is expensive..

GOSPLAN HERO's picture

McShit is a great stock.

Dr. No's picture

The BOJ, like all CBs are interested in lining the pockets of the big banks. If they were interested in increasing wages, the would do a negative withholding on paychecks. What they say in meeting minutes are mearly an attempt to disguise their primary goal of making the bank boards rich.

Tree of Liberty's picture

Horse meat is getting expensive, eh!

SmittyinLA's picture

I think they'd go for horsemeat, its nostalgic

gold mans sack's picture

It's OK. Lagarde approves of the easing measures.

fiddy pence haff pound's picture

I would say QUALitative easing, but McChucks has nothing to do with quality.

They oughta study what mental defect makes Japanese buy that shit. Where

I grew up, i just knew it was brainwashing of children. Old fashioned capitalism.