Thrifty Japanese dash ‘revenge spending’ hopes as they sit on US$383 billion in pandemic savings

Japanese consumers are tightening their belts as energy, food and other living costs soar – exacerbated by a sharp decline in the yen and the Ukraine war

The government had hoped shoppers would splurge as Covid-19 curbs eased, but some 9 per cent of the economy is still tied up in what’s called ‘forced savings’

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A woman pays for goods with yen banknotes at a shop in Tokyo. Most Japanese expect goods to become more expensive this year, a government survey found. Photo: AFP

Published: 10:18am, 2 May 2022Updated: 10:19am, 2 May 2022

Japanese mother-of-three Maiko Takahashi was never one to pinch pennies or accept hand-me-downs for her children even though circumstances for her single-income family have always been fairly modest.

But times have changed. Nowadays, she has no trouble with used clothes and her pursuit of bargains and scrimping on the most trifling costs borders on the obsessive.

“I’ve started to pay close attention to tips on TV shows, like minimising the number of times you open the fridge to save electricity,” said Takahashi, whose family of five lives in suburbs north of Tokyo. “We’ve started to feel the pinch going about things the usual way so I’ve made adjustments.”

A customer carries a plastic bag from a discount store in Tokyo last month. Japanese consumers are tightening their belts as inflation looms. Photo: Bloomberg

Takahashi’s behaviour is mirrored by a growing number of consumers and underlines a worrying trend for Japan.

After lifting two years of on-and-off coronavirus curbs in March, the government was counting on what’s known as “revenge spending”, pent-up demand triggering a splurge that boosts consumption and a moribund economy, as has been seen in the United States, China and some other major economies.

But with energy, food and other living costs soaring – exacerbated in recent months by a sharp decline in the yen and the war in Ukraine – those hopes are fading fast.

Facing the prospect of struggling with rising prices, Japan’s famously thrifty consumers are tightening their belts even as they sit on the remains of an estimated 50 trillion yen (US$383 billion) – equivalent to 9 per cent of the economy – in “forced savings”, as the Bank of Japan calls it, accrued during the pandemic.