Japan’s core consumer price index increased by 0.8 percent in March, prompting the government to devise a $103 billion subsidy and stimulus package to mitigate the impact of inflation on the economy.
The Japanese government has announced that it plans to take additional actions to encourage long-term changes later this year.
According to Reuters, Prime Minister Fumio Kishida revealed this on Tuesday.
According to Kishida, the administration will prepare an additional budget and adopt it during the current legislative session in order to replenish reserves and secure funds in the event of a recurrence of COVID-19 infections or prolonged spikes in gasoline prices.
The program, he said, was designed to counteract the impacts of inflation and boost economic growth.
“We must prevent rising fuel and raw material costs from delaying the economic and social recovery from the pandemic,” he warned.
Aside from the comfort package, Kishida stated that the administration will lay forth a “complete” package of measures following the upper house election to spearhead transformation in Japan’s society.
The package, according to Kishida, will include measures to help Japan achieve a carbon-neutral society as well as measures to further the administration’s wealth-redistribution-focused economic policy.
“Looking at the medium- to long-term horizon, we need to act preemptively,” he said.
What you need to know
As more firms pass on increased raw material and energy costs to consumers, inflation in Japan continues to rise, reaching a 26-month high.
In March, Japan’s core consumer price index (all products excluding fresh foods) increased by 0.8 percent year over year, the fastest increase since January 2020. In January, inflation was 0.2 percent, and in February, it was 0.6 percent.
Kishida is under pressure to expand fiscal spending ahead of a July upper house election, putting Japan behind several Western countries that are gradually weaning themselves off crisis-mode stimulus measures.
The $132 billion rescue package will include steps to deal with the immediate impact of rising prices, such as gasoline wholesaler subsidies and cash transfers to low-income families with children, and will be funded mostly from reserves set aside in the current fiscal year’s budget.
Furthermore, 6.2 trillion yen of the total will be spent directly by the government. The rest is made up of non-direct spending measures like private-sector finance.
