The Japanese government warned that a weak yen is negatively impacting households’ sentiment and could decrease their purchasing power, according to a report released on Friday. The government expressed concerns about the economic consequences of the currency’s decline.
Back in 2013, former Prime Minister Shinzo Abe’s Abenomics stimulus policies led to an increase in inflation expectations, which in turn boosted household sentiment. However, a recent resurgence in inflation expectations since mid-2023 has dampened households’ mood. This is partly attributed to media reports highlighting rising food prices and the effects of a weak yen on import costs.
The government’s annual white paper on the economy shed light on the potential repercussions of a weakening yen on Japanese households. With purchasing power at risk, households are facing a challenging economic environment that may impact consumer spending and overall economic growth.