Economy Yen's purchasing power at all-time low

Saisuke Sakai, chief economist for Mizuho Research & Technologies, estimates that the average cost burden per household will rise 90,000 yen from last year if the Japanese currency stays around 160 to the dollar, even with measures to combat rising prices. If households become more frugal as a result, consumption could be suppressed. Prime Minister Fumio Kishida said last week that additional electricity and gas subsidies will be provided from August to October to combat inflation.

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t has become more difficult to procure the U.S. meat used in Japan's ubiquitous gyudon fast-food beef bowls. The price offered by American producers has climbed 30% in one year due to a decrease in production. Japanese importers are unable to keep up, in part due to rising costs caused by the weak yen. "Other countries are snapping up what we can't buy," said the head of the livestock division at Sojitz Foods, an arm of general trader Sojitz. Beef imports from the U.S. in January to April were down 20% on the year. The wholesale price of European pork in Japan has surged about 40% in a year amid competition with other Asia nations to procure the meat. The price of Norwegian salmon has climbed 40% over three years, forcing some operators of conveyor-belt sushi restaurants to use lower-quality alternatives.

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Why is the yen losing value?

There are several factors, but it is mainly a "product of divergent monetary policy between the Bank of Japan and its developed-market peers — particularly the Federal Reserve," said Barron's. This is the result of a wide difference in interest rates between the U.S. and Japan; the Bank of Japan "has only just begun to ease off intense monetary stimulus, while the Fed and other central banks are years into tightening cycles."

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How can the yen be saved?
The "grim reality" is that the "slide won't stop until the Federal Reserve relents on its higher-for-longer policy path. And [Japanese officials] have no control over that," said Bloomberg. Beyond this, all "efforts by officials in Tokyo to prop up the yen so far have fallen flat."

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johnnyG said:

I paid 170/liter for regular over the weekend. High, but it doesn't seem especially high. That works out to about $4/gallon, which is about what I saw in chicago a couple weeks ago.

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