Japan’s Prime Minister Fumio Kishida called for a discussion of economic measures next month after ordering the ruling party to present an outline of gasoline and other fuel price relief measures by the end of August.
(Bloomberg) — Japan’s Prime Minister Fumio Kishida called for a discussion of economic measures next month after ordering the ruling party to present an outline of gasoline and other fuel price relief measures by the end of August.
“This summer I have heard the voices of various people who have been suffering as a result of rising gasoline and other fuel prices,” Kishida told reporters Tuesday. “We’ll first thoroughly consider measures for that this month, and then thoroughly discuss overall economic measures next month.”
While overall inflation in Japan has shown recent signs of softening, a scaling back of subsidies has already pushed gasoline prices to fresh highs. Those subsidies and other existing price relief measures are due to expire at the end of September.
Introducing new economic measures to limit the impact of high prices on consumers may help prop up Kishida’s slipping support rate, though it will also add to the premier’s funding difficulties as he still look for ways to pay for childcare measures and expanded defense spending.
The premier said gasoline prices had recently risen to an all-time high of 185 yen per liter. Without existing aid, the price would be as high as 195.7 yen, according to the Ministry of Economy last week.
If the government ends subsidies for gasoline and kerosene, Japan’s key inflation gauge would be pushed up by 0.5 percentage point, according to Dai-ichi Life Institute economist Yoshiki Shinke. Subsidies for natural gas and electricity are holding down overall inflation by an additional 0.99 percentage point, according to the internal affairs ministry.
That would complicate the price outlook for the Bank of Japan. The central bank has repeatedly said that inflation will come back down below 2% and the current price gain trend isn’t sustainable — a position that allows the central bank to maintain its easy monetary policy stance.
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