A little over a month ago, we first (and the Economist about a month later), summarized the plight of Japan's soaring inflation and contracting economy with one word: rice.... well, technically it was a few more words. This is what we said:
What is ironic, is that Japan does not actually have high core inflation; it does however have soaring rice prices which have skewed inflation expectations across the population as rice is a huge component of the overall CPI basket. Meanwhile the BOJ is scrambling to contain inflation - which has tumbled ex food with real wages near record lows - and is tightening conditions by raising rates even though it has zero control over food inflation. However, as a by product of its monetary policies and strong yen, the bond market is crashing every day now, and soon this bond crash will spread to Japan's banks and global markets, sparking a global crisis.
TL/DR: Japan will unleash the next financial crash because the Japanese are now poor farmers.
Fast forward to today when, with just two weeks until a critical election in Japan, attention is finally turning to this most important commodity for Japan... and perhaps the world. And it starts with Japan's Nikkei profiling what we said was ground zero of Japan's inflation crisis: rice farmers.
