TOKYO - Japanese Prime Minister Sanae Takaichi said Tuesday the government will maintain subsidies to cap gasoline prices to ease the impact of inflation on Japanese households amid the ongoing Middle East conflict.
Takaichi said she has instructed officials to make necessary preparations, including securing funding, to continue the program, which keeps gasoline prices at around 170 yen ($1.06) per liter, given uncertainty over how crude oil prices will move.
"We will protect the people and their livelihoods and prevent disruptions to economic activity," Takaichi told reporters at her office in Tokyo.
Resource-scarce Japan relies heavily on energy imports from the Middle East, with supply coming under pressure from the effective closure of the Strait of Hormuz due to the U.S. war on Iran that began in late February.
Takaichi instructed industry minister Ryosei Akazawa to use part of some 2.5 trillion yen in reserve funds to respond to the Middle East crisis and other contingencies included in the supplementary budget enacted in June.
Lawmakers from both ruling and opposition parties have called for a rethink of the subsidies, which come amid concerns over Japan's fiscal health as the government pursues expansionary measures, including plans to implement a two-year cut to the consumption tax on food products from 8 percent to 1 percent from April.
The Ministry of Economy, Trade and Industry said earlier it had spent some 80 percent of roughly 1.16 trillion yen in funding set aside for the subsidies as of the end of July.
The prime minister said the government would closely monitor the effects of the conflict in the Middle East while "flexibly considering how the support should be provided," including when to end the measures.
The nationwide average retail gasoline price stood at 169.80 yen per liter as of Aug. 17, the ministry said last week.
The government has been paying subsidies of around 20 yen per liter recently to keep gasoline prices at the pumps at around 170 yen. At their peak in early April, it paid around 50 yen per liter.
Diesel, heavy oil and kerosene are also covered by the subsidies.
