Soaring prices likely to be key election issue

By Kensaku Fujiwara / Yomiuri Shimbun Staff Writer

13:57 JST, June 22, 2022

Prime Minister Fumio Kishida was grilled over the government’s measures to combat soaring prices, during a debate held this week among ruling and opposition party leaders. Price trends are expected to be a key issue in the House of Councillors election, which was officially announced Wednesday.

Kishida, who is also president of the Liberal Democratic Party, played defense at the debate held Tuesday at the Japan National Press Club, explaining the government’s policy to focus mainly on the prices of energy and food.

When the opposition Constitutional Democratic Party of Japan President Kenta Izumi said that interest rates should be raised, Kishida replied that monetary policy would be decided comprehensively, adding: “Current price hikes are centered on energy and food products. It’s important to focus efforts on these areas.”

Taro Yamamoto, chief of Reiwa Shinsengumi, said the public could not see the specific details of the government’s measures.

Kishida cited data in response, saying: “Gasoline would have been ¥210 per liter, but it’s been kept around ¥170. The price of flour has been restrained by 20% to 30%.”

Natsuo Yamaguchi, chief representative of the LDP’s junior coalition partner Komeito, questioned Izumi over his pledge to cut the consumption tax rate to 5% to tackle the high prices of goods. “How would you secure alternative sources of revenue?” Yamaguchi asked.

He dismissed Izumi’s assertion that his party would try to secure financial resources over the long term, saying: “The reason for raising the consumption tax rate was to secure financial resources for social security. It’s irresponsible to abandon that purpose and use [the consumption tax rate issue] as a policy tool.”

Sense of urgency

The efforts by the government and the ruling parties to emphasize the achievements of the government’s inflation measures show their sense of urgency.

“The public is very interested in this issue. Even a slightly wrong response could change the course of the election in one stroke,” a senior LDP official said.

On Tuesday, Kishida held a first meeting of the headquarters for prices, wages and living standards with Economy, Trade and Industry Minister Koichi Hagiuda and other relevant ministers. The prime minister also held talks with representatives of consumer groups and food product manufacturers. During the party leaders’ debate, he put forward support measures for soaring fertilizer prices and incentives for saving electricity.

Kishida has been working hard to counter the opposition’s criticism of the current inflation — dubbed Kishida inflation by some — stating that the price hikes in Japan have not been as severe as in Europe and the United States.

In its campaign pledges for the upper house election, the LDP pointed out that domestic price hikes have only been about a quarter of the levels seen in other major countries, including the United States.

The prime minister has also been wary of the attacks by the CDPJ and other opposition parties on the Bank of Japan’s monetary easing policy. Kishida met with BOJ Gov. Haruhiko Kuroda on Monday at the Prime Minister’s Office and exchanged views.

The meeting, not previously scheduled, was “meant to show [the two leaders’] unanimity on monetary easing policy,” according to a senior government official.