Weak Yen Hits Japan’s Dinner Table as Food Self-Sufficiency Falls to Record-Low 37%

Engel Coefficient at Highest Since 1981

Import Reliance Deepens Price Pressures

Japan’s prolonged food inflation is being amplified by the country’s low food self-sufficiency rate as the yen weakens, an analysis showed. The finding underscores the limits of short-term price measures such as cash handouts or tax cuts and points to the need to overhaul Japan’s import-dependent food supply structure from a food security standpoint.

According to Japan’s Ministry of Internal Affairs and Communications on October 4, the Engel coefficient for 2025 rose to 28.6%, the highest level since 1981. The Engel coefficient measures the share of food spending in total consumer expenditures.

The main drivers of higher food costs include a broader pass-through of rising raw material costs into product prices and persistently elevated import costs for raw materials and energy.

The structure leaves domestic food prices more vulnerable to a weaker yen. As the Japanese currency loses value, the cost of imported food and raw materials rises, adding further pressure to prices at the dinner table.

Japan’s Cabinet Office said in a recent analysis that broad-based price increases have left consumers with little choice but to accept a certain level of food price hikes. One senior Cabinet Office official added that while immediate price measures remain important, Japan also needs to change a food supply structure that is prone to sharp increases caused by external factors.

Japan’s low food self-sufficiency rate was also identified as a problem. According to the Ministry of Agriculture, Forestry and Fisheries, Japan’s food self-sufficiency rate for fiscal 2025 stood at 37% on a calorie basis, matching a record low.

Reliance on imports is rising not only for finished products but also in the food production process. Cabinet Office data showed the share of imported goods used directly in food manufacturing rose to 14.2% in 2020 from 10.0% in 2000.

Exchange-rate fluctuations also feed into food prices with a lag. The Cabinet Office said changes in the yen tend to affect the consumer price index for food excluding fresh food and rice about a year later.

A Cabinet Office official said improving food self-sufficiency is important not only for strengthening food security but also for easing the impact of exchange-rate swings on domestic prices.

To address rising food prices, the Japanese government plans to cut the consumption tax rate on food to 1% from the current 8% for two years starting in April 2027. While the tax cut would help ease the burden on households, criticism has also emerged within the government that it is not a fundamental solution to food inflation.

As geopolitical uncertainty and yen weakness increasingly threaten to persist, calls are growing for Japan’s food policy to shift its focus from simple price measures to food security. Analysts say that unless the country builds a food supply chain less vulnerable to overseas prices and currency swings, the burden of food costs on Japanese households will keep rising whenever the yen weakens.

Tokyo — Choi Man-su, correspondent, Korea Economic Daily, bebop@hankyung.com