Japan is mulling an extension of its oil product subsidy, which was slated to stop at the end of September, as part of efforts to contain inflation.
Japanese premier Fumio Kishida on 22 August requested the country’s ruling Liberal Democratic Party members to consider the extension to curb rising oil product prices, to mitigate negative impacts on the domestic economy. The details are expected to be unveiled in early September.
This came after Japan’s gasoline retail prices averaged ¥183.70/litre ($200/bl) on 21 August, hitting the highest since August 2008. Average prices have risen especially after Japan’s trade and industry ministry (Meti) started reducing the maximum funding amount of the subsidy in June by 10pc every two weeks until the end of September, on the back of easing crude values. But recent output cuts by oil producing countries have boosted crude prices, resulting in higher domestic product prices again, especially with a weaker Japanese yen against the US dollar, Kishida said.
Meti originally implemented the subsidy to offset soaring oil prices in January 2022, when average gasoline retail prices exceeded ¥170/l for the first time since September 2008. It set the latest subsidy for gasoline, gasoil, kerosine and heavy fuel oil at ¥10/l during 24-30 August, down from ¥12.10/l the previous week. Jet fuel is also subsidised, but the amount is not disclosed.
Meti also started providing subsidies in January to power and city gas consumers, and it is planned to stop at the end of September. Further plans for the two sectors will be discussed after the oil subsidy, among other economic measures.