Prime Minister Fumio Kishida said on Friday that the government will compile fresh inflation relief steps around this fall, providing cash handouts to low-income households struggling to weather the cost-of-living crisis.
The aid will come on top of government subsidies that Kishida also vowed to retain to cut household utility bills. Rising prices have weighed heavily on consumers despite his emphasis on wealth redistribution via pay hikes.
The announcement came as Kishida has been scrambling to shore up public support for his cabinet amid growing voter frustration over his handling of a political funds scandal and the inflation-hit economy.
The premier, who also heads the ruling Liberal Democratic Party, has so far dismissed speculation that he will soon dissolve the lower house for a snap election.
Under the plan unveiled by Kishida, the government will reinstate support to curb electricity and gas bills for households between August and October, when summer-related energy demand tends to increase.
Government subsidies provided to oil wholesalers to limit the rise in retail gasoline prices will remain until the end of the year.
Kishida stressed the need for government support to reach the vulnerable, such as households living on pensions and small firms.
He did not specify how the envisaged cash handouts and other measures will be funded, but a government source said it will consider compiling a supplementary budget for the current business year ending next March.
“As inflation remains elevated, we will need to consider assistance to those who may be left out,” Kishida told the press conference to mark the effective end of the 150-day regular Diet session.
“The provision of gasoline, electricity and gas subsidies goes against our move toward decarbonisation and cannot continue forever. But we are keeping them only this time as rising prices have directly hit regional economies and low-income households,” he added.
Japan’s inflation has been much slower than in other countries like the United States, where central banks have aggressively raised interest rates.
Most of Japan’s price gains have been attributed to higher imported energy and raw materials costs, which have been exacerbated by a weak yen.
Consumer inflation has been at or above the Bank of Japan’s 2 per cent target. It rose 2.5 per cent in May from a year earlier, excluding volatile fresh food, according to government data released on Friday.
During Friday’s press conference, Kishida said the new energy-related measures will be designed to lower monthly consumer prices by an average of 0.5 percentage point or more.
