Japanese government to spend an additional 2 trillion yen to alleviate the effects of inflation

The Japanese government will spend more than 2 trillion yen ($15 billion) in reserve funds from the state budget for the current fiscal year to March on lowering liquefied petroleum gas bills and providing financial assistance to low-income families, according to government sources on Monday.

According to sources, the government intends to give 30,000 to each low-income household and an additional 50,000 to the same group as key pillars of the package.

The ruling coalition of the Liberal Democratic Party and Komeito has urged Prime Minister Fumio Kishida to take additional steps to alleviate the impact of accelerating inflation on households in the run-up to a series of local elections this spring.

As per to the sources, the administration will decide on the package's size after consulting with the ruling parties.

"We will draw up more procedures and implement them rapidly to protect people's livelihoods and enterprises," Chief Cabinet Secretary Hirokazu Matsuno told a regular press briefing.

LPG is used in a lot of rural Japanese houses. In addition to providing oil wholesalers with subsidies to prevent dramatic increases in the price of gasoline and kerosene, the government has already reduced utility rates for homes, focusing on electricity and municipal gas.

The government also handed out cash to low-income, child-rearing families as part of an earlier package.

The volatile fresh food products were excluded from core consumer prices in Japan, which increased 4.2% from a year earlier in January. This is the fastest rate of increase in roughly four decades. The government has taken action to lower electricity bills this year in response to rising inflation brought on by increasing energy prices, which have been exacerbated by a weaker yen.

As per to the plan, local governments will use some of the 1.2 trillion dollars in funding allocated by the federal government to lower LP gas prices and give 30,000 dollars to low-income people.

According to the sources, the government will spend over $1 trillion to provide low-income families with children with $50,000 per child.

Reserve funds in a state budget are allocated for use in emergency situations and the government is not required to seek parliamentary approval for the way the money is spent.

Even though Japan’s fiscal health is in dire straits, the government has implemented steps to cope with the COVID-19 pandemic and high inflation by tapping such reserve funds.