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Japan: What to Make of the Popularity of Cup Noodles

Japan has been plagued with deflation for most of the past 25 years.

About three years ago, Japan's Prime Minister Shinzo Abe initiated massive monetary easing, government spending and business deregulation to jumpstart the nation's economy.

Known as Abenomics, the stimulus program "appears to be stalling," according to Bloomberg (May 10).

One problem is weak consumer spending. But, there's at least one notable exception: cup noodles are flying off the shelves.

A May 17 Reuters article discusses what the popularity of this cheap meal might mean. Here's an excerpt:

Japanese consumers can't get enough of cup noodles, with spending on them surging by more than a quarter over the past year. That sounds like good news, but for a country still struggling to escape deflation it's a worrying signal.

Weak consumer spending is fuelling speculation that Prime Minister Shinzo Abe will again delay a planned sales tax hike, and Japan is expected to have dodged a recession at the start of this year by the smallest of margins — helped by an extra 'leap year' day in the January-March quarter. …

"Consumers remain on guard against rising costs of food and living, refraining from spending on other items, and they're rebuilding savings spent during the last-minute buying spree," said [the] chief economist at Credit Suisse.

Cup noodles, costing as little as 180 yen ($1.65), are a favorite for penny pinchers. Average monthly spending on cup noodles surged 26.1 percent in January-March from a year earlier, government data show — the fourth straight quarter of double-digit growth.

Spending on noodles is growing at the fastest pace since Abe took office in late 2012. At the same time, data shows households are spending less on non-durable goods such as utilities, education, recreation, transport and communications.

You can read the entire article by clicking on the link below: http://www.reuters.com/article/us-japan-economy-consumption-idUSKCN0Y81E0

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