Print 11 comment(s) - last by Mint.. on Jun 4 at 12:11 PM

Weakening yen means price increases in Japan

Apple has become latest major electronics manufacturer to increase the price of its hardware within Japan. Apple and other manufacturers have increased prices due to an increasingly weak yen.

Reuters reports that the Japanese yen has fallen more than 20% against the U.S. dollar since the middle of November. Increasing prices are reportedly rare in Japan where low-grade deflation has occurred over the past 15 years.

Apple has reportedly increased the price of some of the iPad models by up to 13,000 yen, which is equivalent to $130 in local Japanese stores.

The price increase means that the 64 GB iPad now costs ¥69,800 in Japan, an increase from ¥58,800 earlier this week. The 128 GB iPad now has a retail price of ¥79,800 compared to its previous price of ¥66,800.
Prices of the iPod music player has also increased by as much as ¥6000 while pricing for the iPad mini went up by ¥8000.

Source: Reuters

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RE: Weak yen
By Mint on 6/4/2013 12:11:30 PM , Rating: 2
Yes, inflation decreases real value of debt. It's actually a very common tactics every first world country, including US, to pay debt. We really depend on inflation or our economy will tank. I'm talking about a slow 2-3% inflation annually, not 30%.
Well, in the past predictable inflation was pretty much meaningless, because it's priced into everything from wages to debt (e.g. a 3% loan with 0% inflation paid from wages with 0% growth is identical to a 5% loan in a 2% inflation, 2% wage growth environment).

But today, I agree that it actually helps, because interest rates are below inflation. A non-inflating currency today would be like taking today's world and adding up to 2% interest to everyone's loans, tanking the economy.

Therefore, we can probably benefit from a slightly higher inflation (3-5%). Short term rates are bumping into the 0% floor (and this is in turn probably keeping medium term rates higher than they should be), meaning people are getting artificial value retention for saving as opposed to spending/investing.

That's not how you run an optimal economy. Money should only keep its value if something useful is being done with it.

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