Japan Press Weekly

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2022 June 15 - 21 [ECONOMY]

Yen's decline will add fuel to rising prices

The increase in import prices attributed to the drop in the value of the yen is hitting the Japanese economy and people's livelihoods. The U.S. FRB has announced that it will raise interest rates, which will in turn further weaken the yen and spur the price surge in Japan.

The depreciation of the yen brings about an increase in the price of imported products. According to the Ministry of Internal Affairs, the consumer price index (CPI) rose by 2.5% in April on a year-on-year basis. The increase is noticeable in the categories of food and energy: up 4% in the area of food and 19.1% in energy.

Due to the continuation of the weakening yen, price hikes are expected to continue. According to the private credit research firm Teikoku Databank, 19.9% of companies in Japan are planning to raise the prices of their main products or services sometime between July and September this year.

The BOJ domestic corporate goods price index (DCGPI) in May shows a 9.1%-increase, compared to the same month last year. In particular, the import price index (IPI) rose by 42.2% on a yen basis from the same month a year before, far exceeding the CPI.

An additional rise in the price of essential goods and services to people's daily lives will widen economic disparities even more. However, the Kishida government maintains the "Abenomics" economic policy despite acknowledging that Abenomics is contributing to the weakness of the yen against the dollar and is reaching an impasse.

The Japanese Communist Party calls for a drastic review in the BOJ's "different dimension monetary easing" policy as well as for the reduction in the consumption tax rate. The JCP also proposes levying a tax on large corporations' internal reserves in order to increase tax revenues to help SMEs increase wages.