Japanese Prime Minister Fumio Kishida has called for discussions on economic measures next month and has given the ruling party an outline for measures to cut gasoline and other fuel prices by the end of August. "I've heard a lot of people say this summer that they're distressed by rising prices for gasoline and other fuels," he said in a speech on Tuesday. "This month we will first consider the overall solution to this problem, and wait until next month to fully discuss the overall economic plan.”
While headline inflation in Japan has shown signs of softening recently, subsidy cuts have pushed gasoline prices to new highs. These subsidies and other existing price incentives will expire at the end of September.
Yoshiki Shinke, an economist at Dai-ichi Life Insurance, expects Japan's key inflation gauge to rise by 0.5 percentage point if the government removes subsidies for gasoline and kerosene, which would present a more complicated inflation outlook for the BOJ.