Japan must respond to any damage inflicted on the economy by recent rising prices, Finance Minister Shunichi Suzuki said on Wednesday, a sign that the hit to households from the cost of living is emerging as a fresh headache for policymakers.
Suzuki said the recent rise in prices was driven mostly by higher global fuel costs, rather than any increase in import prices from a weak yen.
"If prices rise before wages ... that could hurt household income and affect consumption," Suzuki told parliament. "We must respond to any impact such price moves could have on the economy," he added.
Suzuki did not elaborate on what steps the government could take.
His comments came in response to a question from an opposition lawmaker on whether the Bank of Japan's ultra-loose policy, and a resulting weak yen, were to blame for pushing up household living costs.
Japan's consumer inflation remains stuck around 0.5%, well below Western nations and the BOJ's 2% target. With wages barely rising, however, the hit to households is becoming a politically hot topic ahead of an upper house election likely around July.
The country relies almost entirely on imports for fuel, making its economy vulnerable to oil price swings. The government launched a temporary subsidy programme last month to ease the blow from rising fuel prices on households, and has signalled the possibility of taking further measures.
While the economy rebounded in the final three months of 2021, some analysts expect a contraction in the current quarter as a spike in COVID-19 cases and rising prices hit consumption.
BOJ Governor Haruhiko Kuroda has repeatedly said a weak yen was beneficial for the economy as a whole, and brushed aside the chance of a near-term exit from ultra-loose policy.
(Reporting by Leika Kihara; Editing by Tom Hogue and Raju Gopalakrishnan)
(This story has not been edited by Business Standard staff and is auto-generated from a syndicated feed.)
Dear Reader,
Business Standard has always strived hard to provide up-to-date information and commentary on developments that are of interest to you and have wider political and economic implications for the country and the world. Your encouragement and constant feedback on how to improve our offering have only made our resolve and commitment to these ideals stronger. Even during these difficult times arising out of Covid-19, we continue to remain committed to keeping you informed and updated with credible news, authoritative views and incisive commentary on topical issues of relevance.
We, however, have a request.
As we battle the economic impact of the pandemic, we need your support even more, so that we can continue to offer you more quality content. Our subscription model has seen an encouraging response from many of you, who have subscribed to our online content. More subscription to our online content can only help us achieve the goals of offering you even better and more relevant content. We believe in free, fair and credible journalism. Your support through more subscriptions can help us practise the journalism to which we are committed.
Support quality journalism and subscribe to Business Standard.
Digital Editor
RECOMMENDED FOR YOU