The “Takaichi Fallout”: Soaring prices and a bare dinner table

The “Takaichi Fallout”: Soaring prices and a bare dinner table

Amid soaring debt, strained public finances, and persistent inflation, Japan now faces an additional shock. The emerging Takahuchi fallout, leaving its citizens increasingly distressed. The latest official data showed that Japan’s core CPI rose 3% year-onear to 112.1 in October. Rice prices hit by extreme heat and poor harvests jumped 40.2%. As of the week ending November 9th, a 5 kg bag of rice averaged 4,316 yen, a new yearly high. Many Japanese now say rice has become a luxury. And it’s not just rice. Due to aven flu outbreaks and rising feed costs, food items such as eggs have also become more expensive, with egg prices rising 13.6% yearonear in October. A recent survey shows that over 20,000 food products have become more expensive in Japan this year, about 60% more than last year. Another survey by a Japanese e-commerce platform found that more than 99% of respondents felt burdened by rising prices and 81.6% felt strongly about this. Recently, Japan’s Prime Minister Sai Takayichi’s wrongful remarks regarding Taiwan have heightened tensions between China and Japan, triggering a new wave of sell Japan sentiment and further weakening the yen. Given Japan’s structural dependence on imported energy and food, the yen’s depreciation is expected to push prices even higher, becoming the last straw for Japan’s households. On November 20th, the yen briefly depreciated past the 157.50 level against the US dollar, marking its lowest point in 10 months. In just 7 weeks since San Takahuchi was elected leader of her party, the yen has already declined by about 6% against the dollar before recovering to the current level of 155.1 per dollar. A clear takahi cost now borne by Japan’s currency and consumers. On November 21st, Bank of Japan Governor Kazuo UEA warned that the weakening yen raises import prices, which are gradually passed on to domestic prices, thereby becoming a major factor driving consumer inflation. The International Monetary Fund previously forecast that Japan’s debt to GDP ratio would reach 230% in 2025. Despite an already massive debt burden, Japan’s cabinet recently approved an economic stimulus package worth 21.3 trillion yen. As market concerns over worsening fiscal conditions grow, the yield on newly issued 10-year Japanese government bonds recently hit its highest level in nearly 17 years. At a time when Japan’s economy and household livelihoods are under mounting strain, the political tension triggered by SA Takichi’s remarks can only deepen the crisis cementing the Takayichi fallout.

With rice turning into a “luxury,” the Japanese yen lingering at historic lows, and debt piling up fast, Japan’s economy and households were already stretched thin. Now, Japan’s Prime Minister Sanae Takaichi’s wrongful remarks have stirred up a political storm that’s pushing the country even deeper into a price spiral. For ordinary families, this widening “Takaichi-cost” is nothing short of adding salt to wounds. #TheTakaichiFallout