Japan’s Prime Minister Reveals $113 Billion Economic Package to Alleviate Impact of Inflation
Japanese Prime Minister Fumio Kishida says the economic package will help low-income households and businesses to cope with inflation.
Japanese Prime Minister Fumio Kishida announced on Thursday a 17 trillion yen ($113 billion) economic package aimed at supporting households and businesses to cope with inflationary pressure.
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“On the other hand, in the current situation where the rise in wages is not catching up with the rise in prices, it is necessary to support people’s disposable income temporarily so as to avoid moving back to deflation.”
The government will extend fuel subsidies through April next year and allocate budget to spur investments in the country’s cutting-edge sectors like semiconductor and space industries, according to the news outlet.
Mr. Kishida said that he aims to create an environment that encourages businesses to raise wages.
This economic package is expected to contribute to an average increase of 1.2 percent in Japan’s gross domestic product (GDP) over the next three years, according to a government estimate.
However, there are concerns that this could necessitate the issuance of additional bonds by the government and add to Japan’s public debt, which, currently at twice the size of its economy at 261 percent, is the highest among major economies.
Inflation, fueled by the rising cost of raw materials, has kept above the central bank’s target of 2 percent for more than a year, weighing on consumption and clouding the outlook for an economy making a delayed recovery from scars left by the COVID-19 pandemic.
The rising cost of living is partly blamed for pushing down Mr. Kishida’s approval ratings, piling pressure on the prime minister to take steps to ease the pain on households.
Japan’s core inflation in September slowed below the 3 percent threshold for the first time since August 2022, although it remained above the central bank target, government data showed on Oct. 20.
The core consumer price index, which excludes volatile fresh food costs, increased by 2.8 percent in September compared to the previous year, slightly exceeding a median market forecast of a 2.7 percent gain but easing from 3.1 percent in August.
Prices of food and daily necessities continued to rise but at a slower pace than in August, a sign that cost-push pressures were easing.
Reuters contributed to this report.
