Yen weakness: Japanese consumers are 'feeling the pain,' economist says

Good morning. So I think the inflation number in June was in line with the previous trend. Yes, the overall CPI has kind of accelerated, but it's partially because of the, you know, changing the fuel subsidies, especially in the electricity bills. And the most important scope of the CPI is core, core measure, which is equivalent to the core inflation in other economies. And it has been kind of trending down since last August, sorry, last autumn because of the receding the supply side price shocks, import price shocks. So I think the underlying inflation trend is going down at this moment, Yeah. I mean, you know, at the end of the day, we're still looking at a run rate of around about 2%. So the question, I guess, to Yamaguchi son, is how do you feel about the BOJ? And is this still something on the cards for maybe a rate hike down the road? I mean, not anytime soon, but at least a potential for that because we are now in an inflationary environment in Japan, after all. Exactly. So for the BOJ, the most important factor is wages rather than the CPI itself. And the Japanese wage is set to increase ahead because the negotiated wage from the spring negotiation this year was remarkably strong. But we need to, we need a bit of time. The negotiated wage will be incorporated in the monthly wages probably in this summer, maybe in the August or September. So I think the BOJ will take need a bit of time before taking an action in terms of the short term rate policy. OK, So I can understand the idea of the BOJ being conservative. But let me ask you, as you're on the ground in Japan, I mean, dollar yen at 160, surely food price inflation for the day-to-day, going to the grocery store and so on. Food prices must be rising quite substantially as Japan does import a lot of its food from the from the outside world. Is there a sense that there's sort of rising social pressure that people on the ground are beginning to say, look, enough is enough? We need a stronger yen to reduce our our our imported costs. Yeah, that's really an issue. And I feel that Wagyu or Japanese beef is actually cheaper than the imported American beefs or Australian beefs. And that's really a thing. You know, we import food products from the outside of Japan in order to decline the food prices. But yes, with this yen weakness and also as a global commodity, price rises, the price pressure is increasing and the consumers are feeling the pain because the real income of the household are still negative. So the social pressure is there, but the real question is, can BOJ change the yen's rate with changing the short term rate? Well, hike to hike. It's not. It's other side of the Pacific Ocean. The Federal Reserve is dominant in the in exchange rate development. So I don't think they can change, you know, impact the exchange rate a lot and I think they know that.