One of the projected results of “Abenomics” – a targeted approach to curb the continuous deflation being suffered by the Japanese economy spearheaded by Prime Minister Shinzo Abe and Bank of Japan Governor Haruhiko Kuroda – is the weakening of the yen. This allows for a more attractive stock market situation, thereby encouraging investments foreign and local to pour in. That should theoretically result in consumer products prices shooting up, but also balanced by an increasing income for Japanese consumers. The problem is that prices are shooting up faster than Japanese wages are.
Abe and Kuroda must be given credit for the current stock market situation, wherein stocks are rising and the dollar continuously nearing the symbolic threshold of ¥100 – all under Abe’s new economic policies and the Bank of Japan’s massive monetary easing. This is a “process of the yen being corrected”, according to Finance Minister Taro Aso. But the country is also seeing another phenomenon, albeit an expected one – the prices of consumer goods increasing. Prices have shot up across a wide range of products that include furniture, jewelry, household paper-based products, and daily necessities among others. “We needed to deal with the quick change of the exchange rate,” a spokeswoman for Tiffany & Co. Japan said. The jewelry brand raised the price of its items by about 10 percent on Wednesday. Projected to follow will be car prices and the one that will be felt by the citizens most of all – power consumption prices.
During the month of April, all 10 of the major electric utilities gave their prices a slight increase, and all the major gas companies mirrored this price bump as well. Utility companies have been more reliant on imported fuel and energy sources such as liquefied natural gas because of the nationwide mothballing of nuclear reactors. As the yen continues to weaken, economic experts predict that this trend of rising prices will continue, affecting not just the importers but local companies and manufacturers as well. One could only hope that the projected increase in income would follow very soon.
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