Have you ever heard the phrase "I can't afford to eat cabbage"? If taken literally, it seems like an exaggeration. But recently, due to the continuous depreciation of the yen, a staggering scene has indeed played out in the Japanese market - the prices of some ordinary daily necessities have suddenly "entrenched" and become "new luxury goods".
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On the other hand, in the same period, due to the favorable exchange rate, the selling price of some Japanese luxury brands in China has risen to the "cabbage price", triggering a "sweeping" boom among Chinese tourists. This paradoxical scene has led to deep reflection on the intricate relationship between exchange rates and commodity prices.
The yen continues to depreciate, and the domestic "cabbage price" of Japanese luxury goods
The yen has lost more than 20% of its value against the dollar over the past year. According to data released by the Ministry of Commerce of the Japanese Embassy in China, as of mid-April this year, the exchange rate of the yen against the yuan was about 100 yen to 4.5767 yuan. In the same period last year, the exchange rate was as high as 100 yen to 5.1648 yuan.
This means that holding the same amount of renminbi increases purchasing power in Japan by about 20% compared to before. As a result, the prices of Japanese luxury brands in China have dropped sharply. Typical brands such as Hermès, Louis Vuitton and other popular styles, the domestic price is more than 30% lower than the global unified reference price released by the brand.
In order to attract domestic consumers, some online merchants have launched "cabbage price" promotions by taking advantage of the exchange rate. Taking LV's classic ONTHEGO handbag as an example, the current guide price in the company's stores in Chinese mainland is RMB 25,600. However, in Japan, the current sale price of this same handbag is only 475,200 yen, which is equivalent to only 21,753 yuan, which is equivalent to saving nearly 4,000 yuan in China.
For various reasons, many people think that buying a bag in Japan is a luxury, but buying the same product in Japan becomes a kind of 'inclusiveness'. This is the main reason why many people choose to "sweep" in Japan.
Cabbage has also become a "luxury" and the price of popular goods has risen
Conversely, although the depreciation of the yen has caused some Japanese luxury brands to "buy cabbage" in the Chinese market, this exchange rate fluctuation has also caused the prices of some civilian daily necessities in Japan to rise, becoming "luxury".
Japan's Kyodo News Agency reported that the prices of many daily necessities in Japan have soared to double digits, the main reason for which is the impact of the continued depreciation of the yen. For example, in a large supermarket, the price of a piece of fresh salmon has risen from 100 yen to 130 yen. The price of a tiny apple has also risen from 8 yen to 9 yen. Even the prices of miso and bread, which are often eaten by ordinary people, are rising.
This is happening at the root of the fact that since the Bank of Japan raised its inflation target to around 2% starting on April 26, inflation will hover at a low level of 0-0.1% even if the current loose monetary policy remains unchanged for the time being. The yen's 26 percent depreciation against the dollar led to a sharp rise in the price of Japanese imports, and the real exchange rate fell from 108 yen to 158 yen at its recent high, a 34 percent depreciation.
This has prompted many Japanese food producers and retailers to pass on the rising cost of raw materials to end consumers. In particular, the price of commodities whose raw materials are mainly dependent on overseas imports has risen more significantly, and even the "cabbage price" has been abnormally high.
Expert: The depreciation of the yen stems from the poor economic outlook
So, what is the root cause of the continued depreciation of the yen? In this regard, Jinpei Hara, a professor of economics at the University of Tokyo, believes that the main reason is the market's pessimistic expectations about Japan's economic prospects.
"The main reason for the recent depreciation of the yen is that the market expects that the Japanese economy will not improve for some time to come. "No matter what kind of monetary policy the central bank adopts, if the market is not optimistic about a country's economic prospects, the country's currency will depreciate." "
The Bank of Japan has maintained a low interest rate policy for a long time, aiming to stimulate economic growth. However, Japan's long-term sluggish economy has made this policy move ineffective. Inflation in Japan has risen recently, but domestic demand remains weak, mainly driven by rising prices for imported energy and raw materials. Based on this, the market's pessimistic judgment on the Japanese economy has directly led to the depreciation of the yen.
So, in the long run, will the depreciation of the yen do more good than the disadvantages, or will the disadvantages outweigh the benefits? This requires careful consideration and trade-offs. On the whole, although the depreciation of the yen has brought some opportunities for the time being, it has also had an adverse impact on Japan's own economy and people's livelihood. Only by strengthening the endogenous driving force of the Japanese economy and boosting the people's confidence in the economy can we reverse the depreciation of the yen.