Finance Minister Shunichi Suzuki said on that Japan must respond to any economic damage caused by recent price increases, indicating that the cost of living is becoming a new concern for policymakers.
Suzuki stated that the recent price increase was primarily due to higher worldwide fuel costs, than any kind of increase in import prices due to the weakening of the yen.”
If prices grow faster than salaries, it would impact household income and consumption, Suzuki said in parliament. “We must react to whatever economic impact that such price movements may have,” he stressed.
Suzuki did not go into detail about what the government could do.
He was responding to a question from an opposition politician on whether the Bank of Japan’s ultra-loose monetary policy, and the accompanying weak yen, was to blame for rising household living expenditures.
Consumer inflation in Japan is still hovering at 0.5 percent, significantly below the 2% objective set by the Bank of Japan. However, with salaries scarcely growing, the impact on households is becoming a political hot subject ahead of a projected upper house election in July.
Fuel is virtually completely imported, putting the country’s economy subject to fluctuations in oil prices. Last month, the government announced a temporary subsidy scheme to help people cope with rising gasoline prices, and it has hinted that it may take more steps.
While the economy recovered in the final three months of 2021, several economists predict a decrease in the current quarter due to an increase in COVID-19 cases and rising costs.
BOJ Governor Haruhiko Kuroda has stated repeatedly that a weak yen is good for the economy as a whole, dismissing the possibility of a near-term departure from ultra-loose monetary policy.