Japanese consumers, facing the dual pressures of inflation and a weakening yen, have been snapping up luxury jewelry, pushing related sales to record highs. Jewelry has become a popular choice for the public to preserve value and hedge against risk.

According to data from the Japan Department Stores Association, sales of gemstones, precious metals, and art at department stores nationwide surged 19% year-on-year in the first half of 2026, reaching a total of 330 billion yen (about $2 billion). This set a new half-year sales record since tracking began in 2008.

The yen has fallen to nearly 164 yen against the US dollar, its lowest level since the 1980s. Meanwhile, the core consumer price index, which excludes fresh food, rose 1.6% year-on-year in June. In this economic climate, consumer spending has shifted toward physical assets with stronger value-preservation qualities.

Satoshi Maehara, president of Tokyo-based jewelry manufacturer Happiness and D, stated: "It has become common for people to hold 5% to 10% of their assets in gold instead of cash. With the yen continuing to weaken, more and more people are choosing gold as a store of value. Market demand is rising, and we are seizing this opportunity."

Maehara explained that Happiness and D, originally focused on imported luxury brands and high-end watches, has recently shifted its business focus to jewelry to capitalize on the consumer boom in gold and precious metals. The surge in demand from people using gold for asset allocation has become a major growth driver for the company.

Sales growth in gemstones and precious metals far outpaced the overall average growth of 3.2% across department stores. Duty-free sales at these stores only grew 3.2% year-on-year, indicating that the jewelry boom is primarily driven by local consumers rather than inbound tourists.

Yuki Hayakawa, a 33-year-old office worker, is one such consumer. She used around 600,000 yen of her bonus to buy a diamond and gold necklace from Chaumet, a brand owned by LVMH.

Hayakawa said: "Luxury brands keep raising prices, so buying early is more cost-effective. I try to save on daily expenses, but I also need to treat myself. Jewelry can be worn for a long time, so I think this purchase is worth it."

Industry analyst Catherine Lim noted that rising living costs have made Japanese consumers more cautious about non-essential spending. Compared to designer handbags, consumers now favor branded jewelry. In a research note, she wrote: "Many consumers believe jewelry has appreciation potential. This appeal has been further amplified by the yen's depreciation."

The strong domestic jewelry consumption has also lifted overall expectations for Japan's luxury goods market. Previously, the Japanese luxury industry was under pressure, as the number of inbound tourists—a key growth driver—declined sharply, mainly due to a plunge in Chinese visitors amid geopolitical tensions between China and Japan.

Global luxury giants with large jewelry product lines have also benefited. Richemont, the parent company of Cartier, reported a 20% year-on-year surge in quarterly sales, nearly double market expectations. In a July 15 announcement, the group stated that Japan was its fastest-growing region globally, with the jewelry segment driving significant performance gains. This contrasts with a sales decline in Japan during the same period last year.

Data from Kering, the parent company of Gucci, for the first quarter showed that jewelry sales in Japan surged 57%, while its fashion and leather goods business saw a 14% year-on-year decline.

A spokesperson for Isetan Mitsukoshi Holdings, Japan's largest department store group, stated that jewelry and watches continue to lead domestic consumption, followed by luggage, cosmetics, and food. The stores are expanding their high-end product offerings and related services to cater to customers seeking premium consumption.

Kaori Perkins, a Tokyo-based partner at consulting firm Bain & Company, analyzed that the increased spending on luxury goods reflects a polarization in the consumer market: consumers cut back on spending for ordinary items but are willing to splurge on high-value, durable luxury goods.

Perkins said: "People are increasingly favoring items that don't depreciate easily. This is a manifestation of consumption stratification. For example, they might buy a cheap basic T-shirt, but they are willing to invest in jewelry that is durable and can be retained as a personal asset. It may not be heirloom quality, but it holds its value over the long term."