Currency valuations are often abstract until they arrive at the lunch table. A strategist at Bank of New York Mellon has constructed a new measure of the yen's weakness — the Katsu Curry Index — by comparing the price of a beloved Japanese staple across global markets, and the result is a portrait of a currency trading at nearly two and a half times weaker than its purchasing power suggests it should be. Where economists see exchange rates, ordinary Japanese households see rising prices for meals they have eaten their whole lives, a quiet erosion of daily life that no intervention has yet mana
Katsu Curry Index reveals yen weakness Big Mac misses
Japanese households face rising costs for meals and consumer goods due to yen weakness, affecting purchasing power and affordability of daily necessities.
If curry becomes prohibitive, policy change will follow
Mark
Why create a new index at all? The Big Mac Index has been around for decades.
Mimi
Because the Big Mac doesn't tell you what's happening to Japanese households. A curry dish is what people actually eat in Japan, multiple times a week. It's a better mirror of purchasing power for the people living there.
Mark
So you're saying the currency markets are wrong about the yen's value?
Mimi
Not wrong exactly—they're pricing in different factors. But if you look at what things actually cost to produce and consume in Japan versus elsewhere, the yen looks significantly undervalued. The gap is enormous.
Mark
What happens if curry becomes too expensive for ordinary people?
Mimi
That's when politics enters. Right now it's an economist's problem. But if staple foods become unaffordable, you get pressure on policymakers to intervene again, to strengthen the currency. The index is a warning signal.
Mark
Is this just about food prices, or is it broader?
Mimi
Food is the visible part. But it's everything—imports, services, goods with imported components. The yen weakness is a tax on Japanese households that compounds every day.
El Pulso
- The yen is trading at ¥159.23 to the dollar, but a curry-based purchasing power calculation suggests the fair rate is closer to ¥62.18 — a gap of nearly 100 yen that signals deep structural undervaluation.
- Even a rare joint intervention by Japanese and American authorities — the most aggressive in 15 years — managed only a brief rally before the yen surrendered half its gains and continued sliding.
- The damage is not only felt by Japanese travelers priced out of overseas trips; import costs are quietly inflating the price of everyday meals, goods, and services at home, squeezing household budgets from within.
- A Bank of New York Mellon strategist warns that if staple dishes like katsu curry or ramen become unaffordable, public pressure for a policy shift on the yen will likely intensify and become politically unavoidable.
Currency valuations are often abstract until they arrive at the lunch table. A strategist at Bank of New York Mellon has constructed a new measure of the yen's weakness — the Katsu Curry Index — by comparing the price of a beloved Japanese staple across global markets, and the result is a portrait of a currency trading at nearly two and a half times weaker than its purchasing power suggests it should be. Where economists see exchange rates, ordinary Japanese households see rising prices for meals they have eaten their whole lives, a quiet erosion of daily life that no intervention has yet managed to reverse.
The yen is weak — but Geoff Yu, a senior strategist at Bank of New York Mellon, wanted to show just how weak in terms ordinary people could feel. Drawing on prices at CoCo Ichibanya, a katsu curry chain with roughly 1,500 outlets worldwide, he built the Katsu Curry Index: a purchasing power comparison anchored not in hamburgers but in the breaded pork cutlet over rice that has become a fixture of Japanese daily life.
The result is striking. While the foreign exchange market was pricing the dollar at around ¥159.23 on a Wednesday morning in August, Yu's index suggested the fair rate should be closer to ¥62.18 — a difference of nearly 100 yen. Even the well-established Big Mac Index places the fair value at ¥80.30. Both measures point to the same uncomfortable conclusion: the yen is trading far below what its real purchasing power would justify.
The yen's slide has been steep and recent. Japanese and American authorities staged their most aggressive joint currency intervention in 15 years just weeks prior, briefly arresting the decline before the yen gave back half its gains and resumed falling. For Japanese travelers, the cost of going abroad has become punishing. But Yu's index illuminates a less visible wound: import costs are feeding through into domestic prices, making meals, services, and consumer goods more expensive for households already under pressure.
Yu frames the stakes plainly — if a bowl of katsu curry or ramen becomes unaffordable for working people in Japan, it will likely generate serious political pressure for a change in currency policy. The Katsu Curry Index, like the KFC Index developed for African markets or the Tall Latte Index tracking Starbucks globally, is more than an economic curiosity. It translates the abstraction of exchange rates into something measurable in the most human terms: what lunch costs, and whether ordinary people can still afford it.
The yen is weak. Everyone knows this. But how weak, exactly? And what does it mean for the person sitting down to lunch in Tokyo?
Geoff Yu, a senior strategist at Bank of New York Mellon, decided the world's most famous currency comparison—The Economist's Big Mac Index—was missing something crucial about Japan. So he built a new one around katsu curry, the breaded pork cutlet served over rice that has become ubiquitous across the country and, increasingly, around the world. CoCo Ichibanya, the chain he uses for his data, operates roughly 1,500 outlets globally, making it a reliable proxy for what ordinary people actually eat.
The numbers tell a striking story. On a Wednesday morning in August, the foreign exchange market was pricing one dollar at about ¥159.23. But when Yu ran the numbers through his Katsu Curry Index—comparing what the same dish costs in Japan versus other countries—the math suggested the dollar should only buy ¥62.18. That's a gap of nearly 100 yen. The Big Mac Index, by contrast, suggests the dollar should trade at ¥80.30. Both indexes point to the same conclusion: the yen is being treated as far weaker than its actual purchasing power warrants.
This matters because the yen's collapse has been dramatic and recent. Japanese and American authorities intervened in the currency markets just weeks earlier in what amounted to the most aggressive joint action in 15 years, trying to arrest the yen's slide to its lowest point in four decades. The intervention worked—briefly. The yen bounced back. Then it gave up half those gains and kept falling.
For Japanese travelers, the weakness is obvious and painful. A trip abroad has become ruinously expensive. But Yu's index points to a quieter, more insidious problem: the weakness is also making life more expensive at home. As the yen weakens, import costs rise, and those costs get passed along. Meals are getting pricier. Services cost more. Consumer goods that rely on imported components or materials are climbing in price. The household budget, already stretched in many cases, is tightening further.
Yu sees a threshold approaching. "If the price of a katsu curry, or a bowl of ramen, becomes prohibitive in Japan, it will probably lead to growing calls for a policy change," he said. This is the political economy of currency weakness made concrete. It's one thing for economists to debate exchange rates in the abstract. It's another when a working person can no longer afford the lunch they've eaten for years.
The Katsu Curry Index is not the first alternative to the Big Mac. The Tall Latte Index tracks Starbucks coffee prices globally. The KFC Index was developed to better capture purchasing power in Africa, where hamburgers are less common. But Yu's choice of katsu curry is particularly sharp because it captures something the Big Mac cannot: what ordinary Japanese people actually spend money on, and how currency movements ripple through their daily lives. The index doesn't just measure the yen's weakness in the abstract. It measures what that weakness costs, in real terms, to real people buying lunch.
Citas Notables
If the price of a katsu curry, or a bowl of ramen, becomes prohibitive in Japan, it will probably lead to growing calls for a policy change— Geoff Yu, Bank of New York Mellon strategist
Quieres la nota completa?
Lee el original en The Japan Times ↗
Economy & Finance