Japan will draw up a new economic package in October to deal with rising prices caused by Russia’s war in Ukraine and may draft a supplementary budget to finance it, Prime Minister Fumio Kishida said on Thursday.
“We will consider the steps to be taken in a comprehensive economic package which will be compiled in October in consultation with the ruling parties,” Kishida told reporters in his office. “Based on this, we will decide to form an additional budget at the appropriate time.”
Separately, the government will decide on additional measures on Friday to soften the blow to households from accelerating inflation, officials said, as Kishida has recently seen public support for his cabinet dwindle in opinion polls.
At the end of September, the government will draw about 3.5 trillion yen ($24 billion) from reserve funds for the current fiscal year to finance measures to deal with inflation and the COVID-19 pandemic, Kishida said.
The relief measures include distributing 50,000 yen each to a few million low-income households exempt from paying residence taxes, which will cost around 900 billion yen.
The government will also extend its subsidy program for petroleum wholesalers to reduce retail gasoline prices beyond its current end-September deadline until December.
To avoid a further rise in food prices, the government will maintain the price at which it sells imported wheat to millers.
Russia’s invasion of Ukraine has pushed up energy and food prices, a headwind for resource-poor Japan. A recent sharp drop in the yen also amplifies the impact.
Rising prices have become a hot topic for the administration and the ruling coalition.
Kishida has faced an uphill battle to win over voters amid controversy over whether using taxpayers’ money is appropriate to hold a state funeral for former Prime Minister Shinzo Abbe. He was shot in July by a sniper, who believed Abe had ties to the controversial Unification Church.
The relationship between politicians, especially those in the ruling Liberal Democratic Party, and the Church has come under intense scrutiny. The attacker allegedly harbored a grudge against the religious group because his mother’s church donations ruined the family’s finances.