The Japanese Cabinet today approved a significant economic stimulus package worth 21.3 trillion yen, approximately €117 billion. This comprehensive plan represents the largest spending initiative since the onset of the COVID-19 pandemic and is primarily aimed at alleviating the burden of rising prices and combating persistent inflation.
According to the Cabinet Office, the stimulus will be funded through a supplementary budget, with the largest portion, 11.7 trillion yen, allocated to measures directly addressing price relief. These measures include a 7,000 yen subsidy for gas and electricity bills for each household over a three-month period leading up to March. Furthermore, a one-time cash payment of 20,000 yen will be provided for each child, alongside 2 trillion yen earmarked for regional support.
Specifically, the plan allocates 500 billion yen to fund the aforementioned gas and electricity subsidies, 400 billion yen for the cash payments to families with children, and the 2 trillion yen dedicated to bolstering local governments.
Other key components of the package include approximately 1 trillion yen allocated to suspend the gasoline tax and an increase in the income tax exemption limit, costing an estimated 1.2 trillion yen.
The Cabinet Office projects that these combined price-related measures will collectively reduce the overall inflation rate by an average of 0.7 percentage points between February and April 2026.
This announcement comes as data released today indicated that Japan’s core consumer price inflation rose to 3% in October compared to the previous year, remaining above the Bank of Japan’s target rate of 2%. Economists are closely watching the impact of this stimulus package on both inflation and overall economic growth. The government hopes these measures will provide much-needed relief to households and businesses facing increasing financial pressures.
