Gov't to spend additional ¥2 trillion to ease inflation pain

One time handouts are not the cure. What is the government going to do when utilities go up, and people are not going to be able to pay their electric bills?

Japan's core consumer prices, which exclude volatile fresh food items, jumped 4.2 percent from a year earlier in January.

Why fresh food items are not being counted? To downplay the inflation? Food prices are increasing every week. Now there is bird flu that is pushing the egg prices.

Instead of spening 2 trillion to ease the pain, why not address the source of the problem? Just change your easy monetary policy. JPY gains momentum and import prices will go down.

Last handouts were only if unemployed and other onlys? Wait and see but we ain’t expecting a single yen.

The government, meanwhile, will spend around 1 trillion yen to give 50,000 yen per child to low-income, child-rearing households, the sources said.

Oh, what about the low-income elderly and others who do not have children? What are you going to do for them?

'Government to spend additional ¥2 trillion to compound inflation pain.'

Just fixed it for you.

Cash handouts? Must be an election coming up soon.

Abolish sales tax on food and essential items.

Wouldn’t it make better sense to spend the money on fixing the economy than just on handouts?

Wouldn’t it make better sense to spend the money on fixing the economy than just on handouts?"

Yes, but that wouldn't make for as good media headlines for the upcoming April election. Or perhaps we shouldn't so cynical and the timing of this announcement is just an incredible coincidence.

Gov't to spend additional ¥2 trillion

How Japan combat inflation, poor money into market.

On one hand the BOJ creates some inflation through a super weak JPY due to its ultra loose monetary policy and on the other hand the government try to suppress it! Non sense.

I prefer the handouts that I am eligible for

One time handouts are not the cure. What is the government going to do when utilities go up, and people are not going to be able to pay their electric bills?

Check your bill and the price of kWh, m3 of gas or water.

Since the start of the year, the unit price is considerably down. The government is actually supporting the utilities and this is reflected in the price, at least in Kanto. My bills are down.

As key pillars of the package expected to be compiled on Wednesday, the government plans to give 30,000 yen to each low-income household and an extra 50,000 yen per child to the same group, the sources said.

The child stimulus is per child. But, the adult stimulus is per household? It's not really fair that a multiple-adult household gets the same low 30,000 as a single-adult household.

What exactly is a low income household? There is always talk of support for them, but no details of criteria.

Are single people making ¥250,000-¥300,000 a low income household?

What about a family of 4 where the father works, makes ¥450,000 but thats it for them.?

Cash handouts to ease inflation? Free cash is just diluting the value in the JPY. We should go back to the gold standard instead.

30,000 per family then 50,000 / child for low income families! so a family with 2 kids could get up to 130,000 for 4 assuming both parents are there! it helps for sure for a bout one possibly 2 months but then back to tight belts and half meals.

Instead of giving drops of hand outs in cash to the needy, how about a LONG TERM SOLUTION or solutions like reducing TAXES and or eliminating some for a certain amount of time till things improve.

No one who is really in need of it will get a single yen under that procedure. They should give it exactly to every single person and checking identity. That’s also very unfair as super riches get the same amount as very poor, but at least those very poor really would receive then a little bit guaranteed, instead of getting nothing like always before.

Best way to address inflation:

Energy independence via solar, floating offshore wind, and geothermal energy would radically improve inflation.

Electrify buildings to lock in long term cost effective heating and cooking: (ban gas in buildings like most of EU, California, NY are doing).

In today's news, the 500ml bottle of Evian will increase from 135 to 170, that's a whopping 43.5pct increase!

Just drink tap water

So they expect to put out the fire by throwing some more gasoline on it? When Japan had an inflation problem in the early 70’s, they cured it by freezing the money supply and limiting government spending. It took nearly 5 years to get inflation under control, but the strategy worked. And while American and European inflation was soaring in the late 70’s, Japan’s economy was stable.

But today when the BOJ has to continue to print money to buy its own debt, and to prop up stock prices, it’s simply no longer possible to freeze the currency or curtail public spending. Japan is robbing Peter to pay Paul, and then robbing Paul to pay Peter. This won’t end well.

@blue

In today's news, the 500ml bottle of Evian will increase from 135 to 170, that's a whopping 43.5pct increase!

170/135. + 25 % not 43%

This is big enough!

Cash handouts will only make the government look as if inflation is getting better, its boiling the water and later cooing the books, what the government expects is, the people receiving the money will go out and spend it, and when the latest consumer spending numbers come out the government will say inflation is under control using this logic to make people think they could go out and spend money ,when in fact nothing has changed.

What about a family of 4 where the father works, makes ¥450,000 but thats it for them.?

If working at a company, the father can claim three dependents and a few other things like mortgage tax relief. I'd imagine most folks would pay income tax ("kazei" in Japanese) and therefore not qualify.

If self-employed, it should be fairly easy to come up with enough expenses on top of the three dependents to fall below the income tax threshold ("hi-kazei"). Claim your car, part of your house and bills etc. as expenses and down goes your on-paper income.

So this subsidy is likely to go to genuinely poor and the self employed, who may only be poor on paper.

fwiw, 450,000 after housing cost is probably enough for a family of four, This could be if you live in a family home with elderly parents, if the parents gave you a house (some of my wife's mates got one when they got married), or you bought an akiya for peanuts. Its also enough if you have a cheap UR place or other public housing in inaka, like a local government house with a nominal rent of 30,000 or so. Some towns near me have 30 tsubo houses that are fairly new for 20,000 a month. They built them with anti-depopulation grants from the national government.

Government spending is the cause of infatuation, not the cure.

Inflation is prices going up. They are unlikely to go down again. You may all miss what previous governments viewed as Japan's greatest enemy - deflation.

Free money before an election is hardly a rarity - there won't be so much after the polls close, so don't go wild and book a holiday with it. The UK went into this first with Brexit and (despite handouts) its government are widely hated. Deglobalisation will do this everywhere to all economies. France is following and Macron isn't terribly popular either. The Japanese government are sloshing some cash around to avoid this fate, although I can't see them being voted out over this (or pretty much anything). Hopefully it will reach the poorest who may face hunger and destitution without support. Many Japanese are wealthy enough to not notice the increases. A middle strata of society will notice the reduction in their available cash, but it will not beggar them.

The government presumably considers that it has an unlimited amount of cash to hand out, if enough of it cycles back into the system, but I'm not so sure that is sustainable. How many emergency handouts have there been? Even with Japan's fairly unique way of doing things and the BoJ owning an increasing amount of everything, it doesn't look like a good idea. A quasi-communist finance system would work no better than the Soviet system, and that was a disaster.

If you are impacted by this (in Japan or anywhere), it isn't going to get better. Deglobalisation is a one way ride with a very large ticket price. Sell stuff you don't need. Maybe downsize your property. In the West, most wives work. In Japan, that is a bit less common, but bluntly, more are going to have to. You also need a 'side hustle'. Some the government will partially/completely ban - sharing services, AirBnB and the like. Develop whatever works for you to bring in extra cash each week and start ramping it up. If you have an option to work 4 days a week, use the 5th to grow your own business.

Shifting from a globalised economy back to a nation state system will considerably reduce the quality of life for all but the wealthy. Our governments have set us on course for that and we can't stop them. Buckle up and do what you can to protect yourselves for the dog-eat-dog economic misery incoming. Free cash is better than nothing, but simply working your day job and expecting to be OK is not going to be enough for many, looking ahead. Spending less and bringing in some extra cash will very soon become a necessity for a lot of people who previously didn't need to. Utilise whatever skills you have and start now.

So he now acknowledge that the most valuable in Japanese society are doing it hard. This two trillion will end up back in business pocket and ad to their massive margin. Because that money will go to paid out standing debt first. No, it will not be spent on item for themselves like holidays and tech appliances. Just bring the minimum wage inline with other western economies. That means doubling the minimum wage. Australia is minimum wage is $24 an hour and I think USA is $15 but Germany the UK and France are all up around $20 USD an hour. Open up immigration to fill the minimum wage employment vacancies instead of filling them up with work visas.

Bad move. Cushioning low-income consumers from high inflation will take the pressure off employers to give wage rises which are essential in the quest for the "virtuous cycle" of rising wages and growth.