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Japan considers steps to help with utility bill burden

Economy Sep 29, 2022 12:25AM ET
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© Reuters. FILE PHOTO: Japan's Prime Minister Fumio Kishida speaks at a news conference during his visit to New York for the 77th United Nations General Assembly in New York City, New York, U.S., September 22, 2022. REUTERS/Caitlin Ochs
 
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By Leika Kihara and Takahiko Wada

TOKYO (Reuters) -Japan will consider more steps to cushion the blow of rising electricity bills, a government spokesperson said on Thursday, underscoring the pressure it faces in addressing the burden on households of higher prices for imports from a weak yen.

Electricity bills have risen about 20% in the past year for households and by about 30% for businesses, Chief Cabinet Secretary Hirokazu Matsuno told a briefing, adding that such increases were becoming a "heavy burden" for consumers.

"We'll scrutinise developments of electricity bills and consider whether further steps could be necessary," he said.

The remarks came after the Nikkei newspaper reported on Thursday the government may offer cash payouts to households and firms, as well as subsidies for utilities to ease the pain from rising electricity bills.

The Nikkei said Prime Minister Fumio Kishida may announce his resolve for "unprecedented, bold measures" to directly reduce the burden in a speech to parliament on Monday.

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

The government is expected to announce a package of measures to cushion rising inflation next month, which is likely to be funded by another supplementary budget.

Kishida's administration has seen its approval rating slide, partly because of public discontent over the rising cost of living, as recent sharp falls in the yen push up prices of imported fuel and food.

Underscoring policymakers' worries over damage to growth from the sliding yen, authorities intervened in the foreign exchange market last week to prop up the yen for the first time since 1998.

Any government steps to curb electricity bills would likely affect the Bank of Japan quarterly inflation projection due next month, which is closely watched for clues on how soon the central bank may whittle down its massive stimulus.

"If the government does take steps to curb utility bills, that will put some downward pressure on consumer inflation," said Toru Suehiro, chief economist at Daiwa Securities.

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

While Japan's inflation is much lower than that in other advanced economies, core consumer inflation quickened to 2.8% in August, exceeding the central bank's 2% target for a fifth month, as the weak yen pushed up the price of imports.

BOJ Governor Haruhiko Kuroda has ruled out raising Japan's ultra-low interest rates any time soon, arguing that core consumer inflation would ease back below 2% next fiscal year when cost-push factors dissipate.

($1 = 144.3100 yen)

Japan considers steps to help with utility bill burden
 

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