For the first time in 40 years! This popular Japanese product has increased in price.

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On December 24, Japan's largest pen manufacturer, Pilot Corporation, broke with decades of traditional pricing and raised the price of its best-selling product. This landmark move is the latest example of how Japanese companies are responding to the return of inflation.

According to the Financial Times, Pilot increased the price of its popular Frixion erasable pen by 10% two months ago. This is the first price increase for this product since its launch in 2006. The Frixion series is a core product line for Pilot, accounting for more than 40% of its pen sales in the Japanese market.

Pilot CEO Fumio Fujisaki stated, this is the first time in his 40 years at the company that he has raised the price of a best-selling product. He admitted that after decades of deflation, Japanese companies have had to "change our mindset" and learn to adapt to an entirely new business environment.

Saying Farewell to Deflation, Shifting Corporate Mindsets

Decades of deflation once made "raising prices" an extremely difficult choice for Japanese companies. Fumio Fujisaki pointed out, "Japan had suffered from deflation, and raising prices was very tough for us." However, fundamental changes in the macro environment are forcing companies to rethink their pricing strategies.

Data show that Japan's core inflation rate (excluding fresh food and energy) is expected to stay above 2% next year, providing the Bank of Japan more room to raise interest rates. This month, the Bank of Japan set its main policy rate at around 0.75%, the highest since 1995. From postage to food, consumers are facing increasingly broad price hikes. For example, Japan Post has raised mailing rates by 30%, the first increase in 30 years.

Balancing Shareholder Pressure and Pricing Strategies

Pilot's price increase this time was partly due to pressure from shareholders. According to reports, shareholders have been pushing the company to take advantage of the current inflationary environment to set higher prices. Fumio Fujisaki said the company is taking action, not only by raising prices, but also by seeking greater efficiency and launching more branded products that can command higher prices.

Prior to this, price increases at Pilot were extremely rare. For years, the only products the company had ever increased prices on were its high-end fountain pen series, mainly in response to rising gold costs. Until October of this year, the Frixion erasable pen, which accounts for more than 40% of the company’s domestic sales, had remained at 230 yen (about $1.47), exactly the same as when it was introduced nearly 20 years ago.

Risks and Leadership of a Market Leader

Though necessary, raising prices is not without risks. Fumio Fujisaki admitted that this move is a test of Japanese middle-class consumers' willingness to pay more for daily necessities, as well as a test of whether competitors will choose to maintain low prices to gain market share.

"It's too early to judge consumer reaction now," he said, "but if competitors can provide the same quality at the original price, then that would be a problem."

Nevertheless, as Japan's largest pen manufacturer, Pilot is also aware of its leadership role in the industry. Fumio Fujisaki believes the company "should take the lead in price management... If we raise prices, other companies may follow suit." He added that the prices of daily foods such as eggs and natto have already risen, and everyday goods like pens are the "remaining part." This suggests that more price adjustments in daily consumer goods may be ahead.

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