The Cabinet Office announced on the 15th that July-September GDP decreased by 0.3% compared to the previous quarter. The annualized rate decreased by 1.2%. GDI (gross domestic income) deteriorated by 3.9% compared to the previous quarter on an annualized basis, worse than GDP. High resource prices and a weaker yen have pushed the outflow of income overseas to a record high. The number of bankruptcies due to the depreciation of the yen has also increased sharply, with 21 cases from January to October according to Teikoku Databank. It seems to have been concentrated after August when the yen depreciated sharply.
There are some who view it as a problem that personal consumption, which accounts for more than half of GDP, has become thrifty due to the impact of rising resource prices and prices, and that there is no sign of improvement. Uka I am particularly conscious of prices when I buy ingredients at the supermarket. Until a few months ago, I felt that prices were definitely going up, but I don’t think prices are that high now. This is because when you go to a supermarket, you will find products sold at lower prices than before, under the guise of “life support prices” or “now only sales.” If you choose and buy such products, it will actually be cheaper than before. Also, an increasing number of shops are starting a point service that offers a \500 discount if you collect 10 stamps. From the consumer’s point of view, it’s a blessing, but from the store’s point of view, it’s literally a bleeding service, and it will be difficult to continue.
Here lies the problem of the Japanese economy. In short, the bankruptcy due to the weak yen is the exhaustion of a company that has no choice but to provide products at low prices despite high resource and commodity prices.
Japanese consumers may be addicted to deflation rather than thrifty. If we are truly addicted to deflation, private consumption will not rise so easily. It’s been a painful reminder for decades. The true economic policy that should be taken is to prescribe an antidote for deflationary addiction and get the economy back on its feet. Ah, this is something that has been repeatedly pointed out over the last few decades…

(Kei Kitajima)