Abenomics is the name Western economists give Japan's program of Fed-style intense money printing and zero interest rate policies. It's been hailed a a miracle for the Japanese economy. Meanwhile savers and seniors are beginning to starve.
Abenomics Spurs Most Misery Since ’81 as Seniors Scrimp
Jun 6, 2014 1:45 AM ET
“The price of everything we eat on a daily basis is going up,” Tatsunami, 70, a retired kimono dresser, said while shopping in Tokyo’s Sugamo area. “I’m making do by halving the amount of meat I serve and adding more vegetables.”
Tatsunami’s concerns stem from the price of food soaring at the fastest pace in 23 years after April’s sales-tax increase. Rising prices helped push the nation’s misery index to the highest level since 1981, while wages adjusted for inflation fell the most in more than four years.
With food accounting for one quarter of the consumer price index and the central bank looking to drive inflation higher, a squeeze on household budgets threatens consumption as Abe weighs a further boost in the sales levy. The prime minister may be forced to ease the pain with economic stimulus, cash handouts or tax exemptions championed by his coalition partner.
“Price hikes without confidence that wages are going to rise will hurt appetite for spending,” said Masamichi Adachi, senior economist at JPMorgan Chase & Co. in Tokyo. “Abe has to raise people’s belief that the economy will improve.”
Food prices rose 5 percent in April from a year earlier, with fresh food climbing 10 percent. Onions soared 37 percent, and salmon -- a staple of the nation’s lunch boxes -- jumped 30 percent. Abe lifted the sales tax by 3 percentage points on April 1.