The relentless decline of the yen threatens to increase energy prices for Japanese households and businesses.
Japan buys its fuel in US dollars, and the weak yen makes it more expensive. This will exacerbate the already expected increase in energy prices in the coming months, as the government abolishes subsidies and increases surcharges to support green energy.
“Fuel costs are reflected in utility bills, so a weak yen is not good for customers,” said Takeshi Hayashi, the vice manager of the Tokyo branch for Shikoku Electric Power. Japan imports roughly all of its fossil fuels, and the costs are automatically passed on to consumers.
The price increases illustrate the far-reaching consequences of the yen’s decline, which reached its lowest level against the US dollar in 34 years on Friday. More precious power threatens to erode the competitive position of Japanese companies, while increasing household inflation.
The cost of shipping liquefied natural gas, priced in yen, has risen about 30% so far this year, according to Bloomberg calculations of Brent oil-pegged contracts. The same shipment in US dollars increased by about 18%.
