Economy

Japan considers steps to help burden electricity bill

Japan considers steps to help burden electricity bill

By Leika Kihara and Takahiko Wada

TOKYO (Reuters) – Japan will consider further steps to mitigate rising electricity bills, a government spokesman said on Thursday, underlining the pressure it is facing in addressing the burden on households caused by higher import prices from a weak yen.

Electricity bills rose by about 20% last year for households and about 30% for businesses, Chief Cabinet Secretary Hirokazu Matsuno said at a press briefing, adding that these increases had become a “heavy burden” on consumers.

“We will examine developments in electricity bills and see if further steps are needed,” he said.

The remarks came after the newspaper reported on Thursday that the government may provide cash payments to households and businesses, as well as subsidies for utilities to ease the suffering of high electricity bills.

The Nikkei newspaper said Prime Minister Fumio Kishida may announce his intention to take “unprecedented bold measures” to directly ease the burden in a speech to parliament on Monday.

Kishida is also likely to announce that Japan will set a target for inbound tourism spending of more than 5 trillion yen ($35 billion) annually, the Nikkei reported.

The government is expected to announce a package of measures to ease soaring inflation next month, which will likely be funded from another supplementary budget.

The Kishida administration has seen approval ratings decline, in part due to public dissatisfaction with the rising cost of living, as recent sharp declines in the yen have pushed up prices for imported fuel and food.

Confirming policymakers’ concerns about the damage to growth from a weaker yen, authorities intervened in the foreign exchange market last week to prop up the yen for the first time since 1998.

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Any government steps to curb electricity bills are likely to affect the Bank of Japan’s forecast for quarterly inflation due next month, which is being closely watched for clues about how soon the central bank will cut its massive stimulus.

“If the government takes steps to reduce utility bills, that will put some downward pressure on consumer inflation,” said Toru Suhiro, chief economist at Daiwa Securities.

“But core consumer inflation is still likely to exceed 2.5% and approach 3% through the end of March this fiscal year, and may not slow down much after that,” he said.

While inflation in Japan is well below that of other advanced economies, core consumer inflation accelerated to 2.8% in August, exceeding the central bank’s 2% target for a fifth month, as a weak yen pushed up import prices.

Bank of Japan Governor Haruhiko Kuroda has ruled out raising ultra-low interest rates in Japan anytime soon, arguing that core consumer inflation will dip below 2% in the next fiscal year when cost drivers dissipate.

(dollar = 144.3100 yen)

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