Akao Aluminum Co., the only supplier of ¥1 coins, has produced its first batch in four years to meet an expected surge in demand for small change as the consumption tax jumps to 8 percent on Tuesday.
In March, Akao finished about 26 million faceless 1-gram aluminum slugs that it sent to the Japan Mint’s Hiroshima branch, where the figure “1” and the year is being stamped on one side, and a symbol of a tree on the other, said Yoshinori Nakao, production manager of the Tokyo-based company.
Minting more coins may save retailers from shortages that accompanied the debut of the consumption tax at 3 percent in 1989, according to Masao Nakata, an economics professor at Seijo University in Tokyo. The tax was last raised, to 5 percent, in 1997. Japan’s coins come in denominations of ¥1, ¥5, ¥10, ¥50, ¥100 and ¥500.
“We still have orders to make another 30 million coins,” Nakao, 57, said last Thursday.
The company won’t make a profit from the original order because it had to rehire four employees out of retirement to refurbish the idled machinery needed, he said.
The company, founded in 1960, makes flat-rolled and shaped aluminum and alloy products.
Raising the sales tax is part of Prime Minister Shinzo Abe’s plan to reduce the world’s biggest debt burden and to stoke inflation in an economy plagued by decades of falling prices. The debt will equal 242 percent of the economy by the end of this calendar year, according to the International Monetary Fund.
The aluminum in the 26 million new coins is worth about $45,000 based on prices on the London Metal Exchange.
Coin usage remains popular in Japan at a time when digital payments — and cybertheft — are becoming more common. The total value of all coins in circulation hit a record in December at ¥4.6 trillion, according to Bank of Japan data.
The government wants to raise core consumer prices by 2 percent within a two-year period that began last April, which a Finance Ministry study showed would increase coin usage. There are currently 38.8 billion ¥1 coins in circulation.
Outlets such as ¥100 shops across the country expect the need for more ¥1 coins as the price of most of their products will rise to ¥108 from ¥105.
“We’ve tried to calculate extra coin demand using several scenarios,” Yoko Matsuda, a spokeswoman for Seria Co., a chain of ¥100 stores, said March 25. “We do expect an increase in demand.”