Japan adds $21 billion to the budget to support the growing cost of living

The decision was made as Japan faced pressure inflationary for the first time in decades.

In the first phase, the government led by Prime Minister Fumio Kishida’s Liberal Democratic Party (LDP) aimed to put forward bailout worth 1.5 trillion yen ($11.7 billion).

The budget includes one-time payments of 50,000 yen in cash for each child living in low-income families and expanded subsidies to fuel wholesalers.

According to the draft, the governing coalition, which faces upper house elections on July 10 as the economy grows and voters struggle to cope with rising energy costs, aims to achieve its goal to ensure a stable supply of oil and basic foodstuffs.

News about additional budget with an estimated total value of 2.7 trillion yen ($21 billion) was a surprise.

The additional budget is estimated to total 2.7 trillion yen ($21 billion). (Photo: Reuters)

Part of this budget will be used for emergency measures and the rest to offset the impact of increased costs of fuel and other products. More than 1 trillion Yen is used to maintain the current fuel subsidy program from June to September.

The package is expected to be submitted to the National Assembly of Japan for approval in May.

Currently, the Yen is trading at a 20-year low against the USD.

Due to the effects of the war in Ukraine and rising fuel costs, inflationary pressures in Japan are currently increasing. While core CPI remained low, at just 0.6% y/y in February 2021 in February, energy costs rose 20.5% in February 2022, while wholesale price inflation picked up to 9.5% in March.

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