JAPAN is currently experiencing hot temperatures reaching 35 degrees Celsius and higher during the day. The rising temperatures have had a positive impact on the economy of the Land of the Rising Sun.
High temperatures tend to encourage consumers to go out and shop. It is believed that extreme heat positively affects consumption when this cycle continues, sometimes referred to as the “extreme heat effect.”
Certain products perform well under extreme heat. According to the Development Bank of Japan, spending on items such as watermelon, ice cream, sherbet and beverages other than green tea increases more on “extremely hot days” when temperatures reach 35 degrees Celsius or higher, compared to days with temperatures between 30 and 34.9 degrees Celsius or moderately hot days.
Recently, heatstroke prevention items such as portable fans and cooling towels have been developed and commercially available, much to the delight of consumers.
But in the case of brutal heat, such economic benefits don’t always emerge. Takuya Hoshino, chief economist at Dai-ichi Life Research Institute Inc., studied the relationship between daily consumer spending and maximum temperatures, and found that consumption trends changed significantly around 35 degrees Celsius.
On days when the maximum temperature is between 30 and 34.9 degrees Celsius, the higher the temperature, the more expenditure. Conversely, on very hot days, the higher the temperature, the less consumption.
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One reason for this might be increased awareness of heatstroke, leading more people to refrain from unnecessary outings.
“We need to be aware that a too-hot summer might cool consumption,” Hoshino said.
Excessive heat can also be a burden on household finances. If the use of air conditioning increases to combat the heat, power consumption will increase significantly, leading to higher electricity bills. Heat can also negatively affect the growth of vegetables, especially leafy vegetables such as cabbage and lettuce.
Yoshiki Shinke, senior executive economist at Dai-ichi Life Research Institute, said, “If the summer heat is excessive, vegetable prices may rise from summer to fall. Vegetables are familiar and frequently purchased items, which means consumers are more wary of price increases compared to other items. This might potentially affect spending.”
While the Japanese government is trying to revive consumption through measures such as flat tax cuts and reviving subsidies for electricity and city gas bills, Shinke warned, “Severe heat might be an unexpected enemy for the economy.” (mainichi/Z-3)
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