HWBs - a fearsome new acronym - a crucial economic tipping-point?

Warm, comforting and exceptionally low-tech: the humble hot-water bottle. A cosy delight to frozen toes on a frigid winter's night; a boon for tepid tummies; a searing, vulcanised-rubber ally for the cold and lonely. Who on earth could possibly submit these blameless friends to the reproachful glare of economic analysis?

The thing is, everybody interested in deflation, interest rates and consumer behaviour should be keeping a very close eye on Japanese hot water bottles - specifically  the massive nationwide surge in hot water-bottle sales. On one level, it's a cheerful wintry tale of snug nights. On another, it's a pretty worrisome signal from the world's second biggest economy.

(Three-letter acronyms have always terrified markets, by the way - SOX petrified accountants, any FSA investigation is bound to be grim and the US economy is being tortured by the financial implications of SIVs. To press-home their over-arching economic importance, I will henceforth refer to hot water bottles as HWBs)

HWB sales in Japan, it seems, have flown off the scale. In most parts of the country they are 100% higher than last year. Manufacturers of hot water bottles have completely sold-down their inventories - one factory in Osaka has an order-book that totally dwarfs its ability to meet demand. Everywhere, from down-at-heel supermarkets in the sticks to swish department stores in Shibuya are tripling - (tripling!) the retail space devoted to HWB displays.

And higher-tech companies are swooping-in to exploit the HWB boom - one popular model in the Winter 2007/08 HWB line-up is a classically-shaped affair whose heat-storage gel can be raised to monstrous temperatures by just a few moments in the microwave.

Why? Where has this sudden spike in demand come from?

Oil prices. HWBs are selling so well because crude is more expensive and an HWB represents a cheaper way of warming you through the night than the oil-heaters that everyone merrily used to have in their bedrooms. (Electric blankets, by the way, are selling a little better, but are not a substantially cheaper option than the oil heater)

You see, corporate Japan - and, indeed, the rest of the world - have been putting a quite remarkably brave face on $90+ crude oil prices. But something was always going to give. Companies across the globe and in virtually all sectors have been straining beyond imagination to pretend that these prices were somehow manageable, and to their credit, have done an excellent job of protecting us from the worst of it. Yes, petrol prices are blistering, but the oil crisis was always going to be most visible at what is effectively the front-line of consumer exposure to crude prices. What is truly astonishing is that the prices of a plastic comb, a pot of paint or a litre-bottle of Evian have not tripled  since 2003.

And yet, Japanese - comparatively rich consumers in the world's second biggest economy - have shown themselves to be hyper-sensitive to the extremely minimal price-hikes with which they are now confronted. It's rather like the story of the Princess and the Pea - the noble breeding of the princess was exposed because, even through a dozen soft mattresses, the presence of a pea was enough to disturb her sleep. And we should probably be concerned that the Japanese economy is behaving like the sensitive, pampered skin of a spoilt princess.

When it comes to HWBs, the Japanese are not so much demonstrating their nobility of breeding, but their utterly reliable tendency to stinginess. I am always baffled by how seldom the phrase "tight-fisted" appears in the analysis of Japan economists, because it undoubtedly explains an awful lot. Japanese consumers, for all of their gadget-loving experimentation, show quite astounding ingenuity when  looking for ways of doing things cheaply. It is the interesting flip-side of that curious Japanese discomfort with making excessive profit.