Japan releases $200 billion package to mitigate inflation

Reuters reported that Japan is determined to fight inflation decisively next year. On Friday, a list of measures will be announced that, among other things, help cut energy costs. Such measures will help both to fight inflation and justify the Bank of Japan, which so far has no plans to raise interest rates.

The Fumio Kishida administration announced plans to develop measures to combat inflation last month. The measures are necessary because the economy is still suffering from the measures taken during the COVID-19 pandemic. It’s estimated that more than 200 billion dollars (from 26 trillion to 30 trillion yen) will be spent to fight inflation.

The level of core consumer inflation in Japan has been kept above the target level of 2% set by the Bank of Japan for half a year now. At the same time, analysts at Daiwa Securities believe that at the beginning of next year, the impact of future measures can be both felt and seen. The inflation rate should fall in the period from January to March 2023, according to them. Mainly, the measures that reduce the inflation rate will affect the cost of electricity and gas.

SMBC Nikko Securities analysts also believe that as early as January, due to lower electricity and gas prices, the inflation rate will decrease by about 1.1% year-on-year.