Here
and
Now

kuchikomi

'Abenomics' hitting consumers from all sides

35 Comments

Is “Abenomics” producing a revival or a bubble? The jury’s still out, and probably will be for some time, but Shukan Post (June 14) fears the worst. It sees prices rising but not salaries. What can that portend, it wonders, if not that dreadful-sounding word “stagflation” – soaring prices in an economy that continues to stagnate?

A lot of the numerical indicators look good, so far. Japan seems to be moving again after two “lost decades.” Stocks are generally up, the yen is down, business leaders are optimistic, companies have started hiring again.

But for the average citizen, Shukan Post sees only hardship. The rise in prices of everything from utilities to toilet paper, food to furniture, necessities to luxuries, has already begun and will accelerate through the summer. The cheap yen is excellent for exporters, but Japan imports massively too. It’s a trade-off whose ultimate impact is, one concludes from widely varying predictions, unpredictable.

The magazine offers a wide-ranging survey of recent sudden price increases. Bread: up 2 to 6%. Pasta sauce: 9 to 11%. Mayonnaise: 6%. Canned tuna: up to 345 yen from 330 yen in April. A McDonald’s 100-yen Mac is now 120 yen. Kaitenzushi has spiked from 94 yen a plate to 105 yen.

Trivial stuff, item by item, and yet it adds up. The rich won’t mind so much, but they too are affected: Louis Vuitton bags, to cite just one example, are up on average 12% since February.

An across-the-board price rise is of course what "Abenomics" was designed to achieve, so we should be celebrating, right? Deflation stymied the Japanese economy for two decades. Higher prices signal recovery. That’s the theory. But what if in fact it doesn’t work that way? There’s no guarantee that it will, and some experts see disturbing signs that it won’t.

“International grain prices have been rising for the past year,” observes economic journalist Hiroko Ogiwara. “Until recently, the high yen kept domestic grain prices down. Now, with the yen down, that no longer applies ... and if grain is expensive, so is animal feed, which drives up the price of meat.”

Similarly with imported oil and gas – necessary in increased quantities with all but two of Japan’s nuclear reactors shut down. The low yen means more expensive fuel, which leaves few corners of the economy unaffected.

Shukan Post sees another problem with textbook "Abenomics." The low yen was supposed to fuel Japanese exports, whose surge would ripple through and animate the entire economy. Exporters are indeed posting higher net profits – but only because, the magazine says, of a more favorable exchange rate; not because they have suddenly started out-innovating and out-selling their foreign competitors; on the contrary, the magazine complains, they haven’t, so their slightly rosier situation has failed to spread to other sectors.

To return to the question we began with: in Shukan Post’s view, the answer is: It looks like a bubble. Meanwhile, it reminds us, next April the consumption tax is due to rise to 8% from 5%. “When that happens,” it concludes, “unless things change, we’ll be getting hit from all sides.”

© Japan Today

©2020 GPlusMedia Inc.

35 Comments
Login to comment

"Shukan Post fears the worst"

Oh well, it's all over then, lol.

1 ( +3 / -2 )

Increasing public spending, rising costs, increased taxes, less disposable income, sounds to me like the optimism that is keeping Abe's poll numbers inflated are based upon "feelings" rather than fact!

12 ( +14 / -2 )

I agree Yubaru and a year down the line I reckon the average Japanese person won't be feeling too optimistic when they look at how out of pocket they are.

9 ( +10 / -1 )

It's just another form of the famous trickle down economics. The weak yen benefits large international corporations who export goods so that hopefully the resulting cash flow will spread to the rest of the economy. Except no, there are tons of business that don't run on exports but on service that won't get much benefit out of this new economic strategy.

5 ( +6 / -1 )

Exporters are indeed posting higher net profits - but only because, the magazine says, of a more favorable exchange rate; not because they have suddenly started out-innovating and out-selling their foreign competitors

Ah, the truth hidden in the next to last paragraph.

Abenomics doesn't even qualify as smoke and mirrors.

Cheap yen may help a few companies sell stuff on price only, but it will cause a lot more damage than these paltry benefits.

8 ( +9 / -1 )

Nothing has trickled down to me yet. An above poster is right - it does not qualify as smoke and mirrors - other than the smoke being blown up our ...XXXX.

7 ( +7 / -1 )

in the Hayekian vision, an explicit recognition of the time element in economic activity leads to a means-ends reckoning of production and consumption. The market rate of interest keeps production in line with people's willingness to save and allows for sustainable economic growth. Accordingly, overriding the market rate with a lower, growth-inducing rate steers the economy onto an unsustainable growth path. The unsustainability manifests itself as the boom and bust phases of the business cycle.

sigh.. the price of sushi is rising !..

1 ( +1 / -0 )

Shukan Post (which we all know id the FT or Economist of the Japanese press) seem to have got this one right.

1 ( +2 / -1 )

I am more than happy to assist with the "breed like rabbits" leg of Dog's recipe for growth.

1 ( +2 / -1 )

...and yet Abe and his cohorts continue to promote Abenomics day after day ... especially on TV where it seems they are attempting to brainwash viewers into believing that all is well in Abeland.

With the election coming up next month, we'll be swamped with "good words" about Abenomics. Just hope the voters take a glance in their wallets & coin purses before casting their votes. If they want more empty space in them, then go ahead and vote for the LDP & Komeito.

As the Shukan Post article above says ... we'll be clobbered financially from all sides ...

3 ( +5 / -2 )

"go ahead and vote for the LDP and Komeito"

The alternative is Hashimoto & Ishihara's Restoration Party or the DPJ, lol.

5 ( +6 / -1 )

Shukan Post chooses to fear the worst. What else would sell?

1 ( +3 / -2 )

The goal of Abenomics and inflation is to scare people into buying today because tomorrow it will be more expensive.. which is well and good for the big ticket items, but necessities like food, gas, clothing, home goods are going to take the biggest hit. How can people keep up with this if their salaries are flat?!?!

If the economy is "doing better" only on the back of the exchange rate, it is doomed!! When your citizens have to make choices like instead of buying a new TV we have to buy food instead, what can you expect? I guess it doesn't really matter then... because of the cheaper yen, the rest of the world will buy the TVs instead and the country will devolve into a working poor society.

Bravo Abe, prosperity indeed

5 ( +6 / -1 )

People should be buying Japanese made items now to help Abenomics along = this should force manufactures to bump up local production. I would also stock-up on some food items that are storable. Large ticket exported (from Japan) items like cars/motorcycles take awhile for the prices to drop, but you should start seeing this also.

=It will be up to the Japanese public and their buying power to make this succeed. Turn your back to the imports (includes foreign food) and Japan will be successful once again. If you really want something imported = buy used from someone in Japan.

-1 ( +2 / -3 )

Reading the article, I feel, once again, I'm reading old posts from JapanToday readers.

2 ( +2 / -0 )

not because they have suddenly started out-innovating and out-selling their foreign competitors

Except automobile, what make you think foreigners want to buy any japanese product nowadays, they are badly supported by the manufacturers, unnecessary complicated, no longer high-end compare to competitors and specially not designed for them. For years Japan closed their market saying to foreigners "sorry your product is too western style" refusing to mix with foreign tech, congratulation, you are now just manufacturing niche local product.

1 ( +3 / -2 )

BlueMind

It's just another form of the famous trickle down economics.

Ever wonder why trickle down does not work in the US? It does not, because trade/labor union is weak there. If the trade union is strong, it will squeeze the money from the corporate. "We are the 99%" thing will continue until they re-invent the trade union.

1 ( +3 / -2 )

Government Tax receipt has to increase in order to pay for a higher Bond rates in order to escape bankruptcy. For every one percent rise in bond interest it reduces government receipt by 20%(ie to pay for the interest rate) for a 2% inflation rate the bond rates will need to rise to 3% to give investor a 1% in real return thus this will soak up 60% of government receipt. Higher prices will allow the government to received higher revenue to help to pay for the higher interest rate. Without this Abe government will to starring at bankruptcy in the future. Ordinary Japanese will have to face with higher prices of goods.

0 ( +0 / -0 )

The rise in prices of everything from utilities to toilet paper, food to furniture, necessities to luxuries, has already begun and will accelerate through the summer.

Well, then only in Japan, population will applaud such of politic and ask for more. I am yet to understand which part of the abenomics politic is currently making price rising except greed. Now the question, where is all the cash that Abenomics is supposed to distribute ?

2 ( +3 / -1 )

I remember the article about Economists are waiting for telling Abe " I told you so!" moment. It may come sooner rather than later. Thanks to Abe for making Japan as "The land of Setting Sun."

4 ( +4 / -0 )

The goal of Abenomics and inflation is to scare people into buying today because tomorrow it will be more expensive.. which is well and good for the big ticket items, but necessities like food, gas, clothing, home goods are going to take the biggest hit. How can people keep up with this if their salaries are flat?!?!

Maybe the idea is to force women into the workplace instead of leaving once they have kids or get married.

1 ( +1 / -0 )

As always, the rich get richer and the poor get poorer. I was shocked to buy my usual bread roll recently, the staff immediately began apologising...took me a moment to realise that the regular price of 240¥ was now 265¥ Yes everything is rising in price and as usual salaries are not.

4 ( +4 / -0 )

"Abe-geddon" coming by next April... Kiss your pretty little ( )*( ) "Goodbye...."

0 ( +1 / -1 )

What alot of rubbish, my loaf of bread is still 220yen and have not seen any price increases in daily products, dont buy mcCrapdonalds so not noticed their price rise.

If you believe and succumb to articles like this then you need to get your head read.

-7 ( +0 / -7 )

"... we'll be swamped with "good words" about Abenomics...."

It's telling that the media, and by extension all of us in the general public are using a buzz-word to describe Abe's economic policy.

1 ( +1 / -0 )

StormRJun. 12, 2013 - 09:17AM JST

What alot of rubbish, my loaf of bread is still 220yen and have not seen any price increases in daily products,

Why would it rise, when you're already being ripped off, if you're paying 220yen for your loaf of bread?

A loaf of bread in Seiyu is 75yen.

However, as usual, StormR missed the point that Pumpkin was making. The contents within his/her bread roll and the electricity used to make it have gone up. If you deny that, you're living in another universe, don't do the shopping or playing at living in Japan.

3 ( +6 / -3 )

Ripped off at 220 yen for my loaf of bread?

The 220yen loaf is far superior to the Seiyu loaf and i wouldnt eat that overly sweet crud.

Your comments are always derogertory too by the way do you ever say anything that is positive or not rubbishing someone else? All your posts are either rubbishing japan or other posting you pieous full of yourself prat.

I live in Japan successfuly for 20 years too and play most happily here, maybe i havent noticed price increases is because i do not have to count every yen nor watch where it goes, paying alittle extra from time to time goes unnoticed, unlike some scrooges and poorpers who have to count evey last yen.

Pity You.

-3 ( +0 / -3 )

StormRJun. 13, 2013 - 01:03PM JST

Your comments are always derogertory too by the way do you ever say anything that is positive or not rubbishing someone else? All your posts are either rubbishing japan or other posting you pieous full of yourself prat.

http://austin.eater.com/tags/pieous

http://www.urbandictionary.com/define.php?term=derogertory

-1 ( +2 / -3 )

Neither revival nor bubble. Just market volatility, headlines, opportunity for retailers rto add a bit on their prices and eventual pain for hito in the michi and disaster for the Japanese economy.

1 ( +1 / -0 )

A lot of the numerical indicators look good, so far. Japan seems to be moving again after two “lost decades.” Stocks are generally up, the yen is down, business leaders are optimistic, companies have started hiring again.

That is old news. Today's news has the Japanese stock market going down and the yen going up. Abe, as I said before, is playing with smoke and mirrors. He is only manipulating the yen, not making any significant structural changes. The article notes that exporters are only raking in profits because of the lower yen, not because they are outselling anyone. Meanwhile the rest of us get higher prices, which means we will eventually spend less.

Bubble or not bubble? I have yet to see anything resembling a classic bubble like the 1920's Bull Market or the 1980's Japanese Miracle (thank goodness). Abe is producing a lot of gas but no bubble. There will be an equal and opposite reaction to his antics, which will like bring about is economic hardship and his removal from office but nothing (let's hope) as horrid as the 2008 depression (um, excuse me, recession).

0 ( +1 / -1 )

Abe is producing a lot of gas

lol

-1 ( +0 / -1 )

The yen is not really "down" that much if you use a measure beyond two years. The yen settled decisively above the 90 yen to dollar level only as recently as April of 2011. At its current exchange rate in the mid 90's, it has regressed to the 5-year average level compared to the US dollar, ie, it hasn't really changed in value over this period of time.

0 ( +0 / -0 )

Small businesses are suffering under the barrage of tax and utility increases. Smug denials by salary drones notwithstanding, things are not going well.

0 ( +0 / -0 )

QE didn't work in the States so why would it work in Japan? What Japanese do you know investing in the stock market? I've met one in two decades here! Abe has no mechanism in place for the average Japanese to benefit .....

1 ( +1 / -0 )

Able is the man.

0 ( +0 / -0 )

Login to leave a comment

Facebook users

Use your Facebook account to login or register with JapanToday. By doing so, you will also receive an email inviting you to receive our news alerts.

Facebook Connect

Login with your JapanToday account

User registration

Articles, Offers & Useful Resources

A mix of what's trending on our other sites