As the yen weakens, the widening gap between people who own assets and those who do not, along with the struggles of small and medium-sized businesses, is expected to become increasingly pronounced, raising concerns over higher prices and the growing burden on households. Some also point out that the impact on the economy as a whole could vary depending on the yen's future trajectory.
1) If the yen weakens beyond the mid-¥160s per dollar, import prices for energy resources, basic materials, fertilizer, semiconductors and food could rise, raising Japan's inflation rate further. The Bank of Japan may take time to normalize monetary policy, and fiscal policy is seen as one factor, together with its effects, contributing to yen depreciation.
2) The yen's continued weakness is seen as widening disparities between individuals and companies. The gap in long-term viability could grow between companies capable of earning revenue overseas and those dependent on domestic transactions and consumption. Among individuals, the gap between people who own assets and those who do not is expected to widen.
3) Personal consumption has not consistently exceeded pre-pandemic levels. Real private final consumption expenditure was approximately ¥313 trillion, or 54% of GDP, in the July–September quarter of 2019, but fell to approximately ¥310 trillion, or 52%, in the January–March quarter of 2026. Further yen depreciation could strengthen households' tendency to economize and raise concerns that the contraction in domestic demand will accelerate.
4) Further yen depreciation could increase the risk of bankruptcies among small and medium-sized businesses in sectors such as food services, lodging, transportation and construction, and could also affect potential growth in areas such as education and child-rearing. Some have called for measures to correct the yen's weakness and stabilize the exchange rate to be considered and implemented.