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Japan to spend additional $15bn to ease inflation pain

Fumio Kishida government to give $227 to each low-income household

Japanese Prime Minister Fumio Kishida speaks at a meeting of the government's inflation taskforce on Feb. 24. (Photo by Hirofumi Yamamoto)

TOKYO (Kyodo) -- Japan will spend over 2 trillion yen ($15 billion) in reserve funds from the state budget for the current business year to March to give cash handouts to low-income families and cut liquefied petroleum gas bills as part of a fresh inflation-relief package, government sources said Monday.

As key pillars of the package expected to be compiled on Wednesday, the government plans to give 30,000 yen ($227) to each low-income household and an extra 50,000 yen per child to the same group, the sources said.

The ruling coalition of the Liberal Democratic Party and Komeito has been urging Prime Minister Fumio Kishida to take additional steps to ease the pain of accelerating inflation on households ahead of a series of local elections this spring.

The government will finalize the size of the package in consultation with the ruling parties, the sources said.

"We will draw up additional steps and implement them swiftly to protect people's livelihoods and businesses," Chief Cabinet Secretary Hirokazu Matsuno told a regular press briefing.

Many households in rural Japan use LP gas. The government has already lowered utility bills for households, targeting electricity and city gas, on top of subsidies given to oil wholesalers to keep gasoline and kerosene prices from rising sharply.

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

Japan's core consumer prices, which exclude volatile fresh food items, jumped 4.2% from a year earlier in January, marking the fastest pace of gain in about four decades. As higher energy costs, amplified by a weaker yen, have been driving inflation higher, the government has moved to reduce utility bills this year.

Under the plan, local municipalities will tap around 1.2 trillion yen in funds provided by the central government to cut LP gas charges and provide 30,000 yen handouts to low-income families.

The government, meanwhile, will spend around 1 trillion yen to give 50,000 yen per child to low-income, child-rearing households, the sources said.

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.

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