Japan’s ruling Liberal Democratic Party will call for an extension of gasoline subsidies to the end of this year, in order to ease the hit from inflation on households, according to a draft of the proposal seen by Bloomberg News on Wednesday.
(Bloomberg) — Japan’s ruling Liberal Democratic Party will call for an extension of gasoline subsidies to the end of this year, in order to ease the hit from inflation on households, according to a draft of the proposal seen by Bloomberg News on Wednesday.
The price of gasoline has been rising recently and stood at 183.7 yen per liter as of Aug. 21, according to the economy ministry. The government’s subsidies for fuel started in January 2022 and are currently set to end at the end of September.
Prime Minister Fumio Kishida called for a discussion of economic measures next month, as a rise in the cost of living continues to hit households. His popularity has recently been hovering around record lows since he took office, but some analysts speculate he may still be looking for an opportunity to call an election by the end of the year.
Kishida’s party is also set to suggest that the government retain assistance for electricity and gasoline bills until the economic measures take effect, according to the draft.
The government’s subsidies have so far been helping keep overall inflation levels down, a move that’s likely helped the Bank of Japan to argue that current price gains aren’t sustainable, and monetary easing is still needed.
If the government were to scrap subsidies for gasoline and kerosene, it could potentially push up Japan’s key inflation rate by 0.5 percentage point, according to Dai-ichi Life Institute economist Yoshiki Shinke.
–With assistance from Takashi Hirokawa.
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