Japan may trim gasoline subsidies from December as budget strain grows

Japan launched an emergency gasoline subsidy in March to protect households and businesses from a spike in oil prices triggered by the US-Israeli war with Iran. As crude prices stay high, the scheme now drains the 3.1 trillion-yen supplementary budget at a rate of several billion dollars per month. Two officials from the ruling party told reporters that the government is considering scaling back the weekly subsidies paid to fuel distributors, which would raise the average retail price to roughly 175 yen per litre in December and 180 yen in January.

The discussion comes ahead of Prime Minister Sanae Takaichi’s scheduled reduction of the consumption tax on food and beverages from April next year, which is expected to ease household financial pressure. A source indicated that the government hopes to minimize gasoline subsidies once the tax cut takes effect. The Agency for Natural Resources and Energy has not commented, and the government is also looking at reviving gas and electricity subsidies that expired in September.