- Bank of Japan Governor Haruhiko Kuroda on Wednesday retracted a remark about Japanese consumers becoming tolerant of higher prices for goods.
- His retraction took place on the same day the yen fell to a fresh 20-year low against the US dollar below 134 yen.
- Yen weakness makes goods more costly to import for Japan.
Bank of Japan Governor Haruhiko Kuroda on Wednesday retracted his claim that Japanese consumers have become tolerant of price increases for the goods they purchase — a remark he made as the country's buying power weakens with the yen at a two-decade low against the US dollar.
"My expression that households are becoming more tolerant of price rises was utterly inappropriate, so I will retract it," Kuroda said in parliament, according to the Financial Times. Kuroda first apologized for his remark on Tuesday.
Kuroda's retraction occurred on the same day the yen fell to a new 20-year low against the dollar below ¥134. The greenback during Wednesday's session was up 1.3%, buying 134.29 yen. A strong dollar and a weakened yen make goods more costly for Japan to import.
The dollar this year has broadly hit 20-year highs against major currency rivals, as measured by the US Dollar Index, as the Federal Reserve has embarked on an aggressive campaign to raise interest rates to combat high inflation.
Kyodo News reported Kuroda made his remark about consumers on Monday at an event organized by the publication in response to a question about a survey conducted by a University of Tokyo professor.
"One hypothesis is that being 'forced to save' during behavioral restrictions imposed by the coronavirus pandemic may have led to improvements in consumers' tolerance for price increases," Kuroda said.
The central bank boss on Tuesday sought to clarify the remark that he made just ahead of July elections for the Upper House in parliament where the government of Prime Minister Fumio Kishida will be tested on issues ranging from rising prices to COVID policies. Japanese companies this year have been raising prices on food, beverages, and other items, putting pressure on households that have largely seen wages stagnate and have been hurt by the coronavirus pandemic.
"I did not mean that consumers are voluntarily accepting the price increases. I apologize if my words led to a misunderstanding," Kuroda told reporters at the Kishida's office on Tuesday, according to Kyodo News.