Photo/Illutration Mayonnaise is one product that has already seen its price increase this year. (Taku Hosokawa)

The plummeting yen is exacerbating the already-heightened burden on consumers and small businesses--and the situation will likely get worse, at least one expert said.

Consumer prices has been rising with the increasing cost of imported petroleum and wheat following Russia’s invasion of Ukraine.

The yen’s depreciation against the dollar means higher costs for imports.

According to a calculation by Saisuke Sakai, a senior economist at Mizuho Research & Technologies Ltd., if the yen remains at around 130 to the dollar on average beyond April, households of two or more people will end up spending 60,305 yen ($462) more than last year.

About 60 percent of that increase will cover gasoline and other energy expenses, while most of the remainder will be spent on food.

Sakai said the negative effects of higher prices would weigh much more heavily on those in lower income brackets.

“The price increases are more prevalent for items that are purchased with higher frequency, so one characteristic of the current trend is a larger effect on those with lower incomes who have a greater ratio of spending on daily necessities,” Sakai said.

A supermarket manager in Tokyo noted that higher prices has led many customers to buy fewer items.

Small businesses are also feeling the effects of the weaker yen.

The Japan Chamber of Commerce and Industry on April 28 released the results of a mid-April survey of small companies.

More than half of the responding companies said the disadvantages of a weaker yen outweighed any positive aspects. Only 1.2 percent of the companies said the merits of a weaker yen outweighed the disadvantages.

A total of 80.7 percent of responding companies cited higher prices for materials, parts and procured products as a negative effect of the weaker yen, while 73.6 percent pointed to the greater burden from higher fuel and energy prices.

At the same time, major exporting companies welcomed the weaker yen.

Fujio Mitarai, chairman and president of Canon Inc., said on April 26 that the weaker yen had been an “extremely large positive factor” for his company, which reported an increase in profit of 11 billion yen for the first quarter of the year.

But consumers and small businesses may have to brace themselves for even higher prices of imports.

Tsuyoshi Ueno, an economist at the NLI Research Institute, said the widening gap in interest rates between Japan and the United States would likely push the yen to as low as 135 yen to the dollar by June.

He predicted the yen would remain between 130 and 135 yen to the dollar thereafter.

(This article was written by Ayumi Sugiyama, Takehiro Tomoda, Taiki Koide, Eisuke Eguchi and Rui Hosomi.)

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