TOKYO - Japan plans to gradually reduce subsidies for gasoline and other fuels from December, Prime Minister Sanae Takaichi said Thursday, amid mounting financial concerns over the costly measure designed to counter price surges.
Takaichi also told reporters in Tokyo that the government will subsidize electricity and gas bills this winter, as it did last year, with a typical household expected to save about 7,000 yen ($44) over three months starting in December.
The move comes as ruling and opposition parties have proposed that the government gradually review the gasoline subsidy program and consider an "exit strategy" given its financial burden on Japan, whose fiscal health is the worst among major advanced economies.
Since March, gasoline subsidies have been provided to limit retail prices at around 170 yen per liter. The target price will, in principle, be raised by 5 yen each month toward spring, while closely monitoring crude oil price trends, Takaichi said.
The fuel subsidies, introduced to curb rising prices amid concerns over oil supplies in the wake of the Middle East conflict, are a "transitional" measure to mitigate the impact on the prices, and the system needs to be made "sustainable," she added.
Takaichi also said that the gasoline subsidies currently exceed 50 yen per liter, costing more than 10 billion yen a day, and that the overall cost of financing the measure since she took office in October last year has reached about 1.4 trillion yen.
Global crude oil prices have sharply risen after the effective closure of the Strait of Hormuz due to the launch of U.S.-Israeli war with Iran in late February. Resource-poor Japan traditionally relies heavily on oil imports from the Middle East.
