TOKYO — Japan said on Friday that it would subsidize around 20 percent of the average family’s electric bill, part of a sweeping economic package that comes as the country struggles with high food and energy prices caused by Russia’s invasion of Ukraine and a yen trading at decades-long lows.
The total package, which weighs in at over $200 billion, includes a wide variety of economic measures, ranging from individual payments to families with children to fuel subsidies for the transportation industry.
The electricity subsidies are set to come into effect in January, but must first be approved by Parliament as part of a supplementary budget for fiscal year 2022.
Japan is the latest country to turn to enormous fiscal relief as it seeks to reduce the impact of geopolitical instability and rampant inflation. In early September, Britain said it would freeze gas and electricity rates for two years as the war in Ukraine and a weak pound drove up prices.
Japan’s economy has barely recovered its prepandemic size, weighed down by weak domestic demand and a yen that has fallen over 20 percent against the dollar during the last year, a heavy burden for a country that is highly dependent on food and fuel from abroad.
The yen’s weakness has had a major impact on inflation in the country, which, while low compared to other countries, is at its highest levels in a generation. Prices in Tokyo rose at their fastest pace in over 30 years in October, jumping 3.4 percent year on year, according to government data released Friday.
Electricity prices — which rose nearly 27 percent in Tokyo in October, the data said — have been a major driver of rising inflation in a country that imports more than 90 percent of its fuel. Inflation has weighed especially heavily on households, which have seen wages stagnate for the last several decades and can ill afford rising costs.