When a country imports almost all its energy, a slide in oil prices to a four-year low should be helpful — cutting costs for companies and households. For Japan, it may not be so simple.
The reliance of the world's third-largest economy on fossil fuel imports has deepened since Japan shuttered its nuclear power industry following the March 2011 Fukushima meltdowns. With the price of Dubai crude oil — a benchmark for Middle East supply to Asia — down more than a third from a June peak, that ought to mean more disposable cash for households who have been hit by an April sales tax hike.
Economy Minister Akira Amari reinforced this good-news interpretation Friday, telling reporters in Tokyo that cheap oil helps to offset the impact of a tumbling yen — which drives up the cost of imported goods. Where sliding energy costs are a challenge is the campaign by policy makers to embed inflationary expectations across the economy.