Prices are rising before incomes are and thus consumers are feeling the pain of the yen’s depreciation driven by “Abenomics.”
First affected are imports, but price hikes for daily necessities and power are looming.
Credit for rising stocks and the yen’s continued depreciation goes to Prime Minister Shinzo Abe’s ultraloose economic policies and the Bank of Japan’s massive monetary easing declared last week.
The central bank’s aggressive easing, orchestrated by BOJ Gov. Haruhiko Kuroda, has the dollar surging near the symbolic threshold of ¥100. Finance Minister Taro Aso has called the depreciation a “process of (the yen) being corrected” after touching highs below 76 to the dollar last summer.
Earlier this month major furniture retailer Otsuka Kagu Co. announced it was raising prices on about 4,500 items “due to the trend of the yen’s depreciation since the end of last year.”
Sofas and tables imported from countries including China and Vietnam are among the items that will cost more from next Tuesday, according to the company. Danish and Italian furniture will go up by as much as 14.2 percent in May, the firm said.
“We needed to deal with the quick change of the exchange rate,” a spokeswoman at Tiffany & Co. Japan told The Japan Times. The luxury brand raised the price of its jewelry by an average of about 10 percent Wednesday.
While the decision was partly based on the rising cost of materials, the company, which cut prices last year when the yen reached historic highs, acknowledged it must take steps to cope with exchange rates.
Other imported products, including wine and foreign cars, are likely to follow the same path as the yen weakens.
It’s only a matter of time before daily items will suffer a similar fate.
Paper mills plan to raise the prices of their household products, including tissue and toilet paper, as they import ever costlier materials.
Paper manufacturers are reportedly in talks with supermarkets and wholesalers to raise the shipment prices of household products by 10-15 percent to pass on to consumers the higher costs of imports such as pulp and wood chips.
Nippon Paper Crecia Co. and Daio Paper Corp. plan to increase their product prices by 15 percent or more starting with April shipments.
The increases translate into an extra ¥10 to ¥20 in the retail price of a pack of five boxes of tissues, an official at a wholesaler said.
Oji Nepia Co. has announced plans to increase its product prices by 10-15 percent.
But the most significant price hike is likely to be for electricity, as utilities rely more on imported energy resources such as liquefied natural gas amid the nationwide reactor halts.
April saw all 10 of the major electric utilities raise prices, as did the major gas companies. The trend is likely to continue as long as the yen keeps depreciating, influencing not only importers but domestic firms as well.
Information from Jiji added