Japanese Prime Minister Sanae Takaichi has instructed her government to prepare a new package of economic measures aimed at alleviating the impact of persistent inflation on households and businesses, Bloomberg reported.
Takaichi, who made history on Tuesday as Japan’s first female prime minister, did not disclose the size of the package or whether it would require additional bond issuance. However, she has ordered the compilation of a supplementary budget to fund the measures.
According to the directive, the package will likely include subsidies for electricity and gas costs during the winter months, along with regional grants to help offset price pressures. It will also encourage small and medium-sized enterprises to raise wages and boost capital investment.
Cash handouts — a proposal floated during the July election campaign but met with limited public support — are notably absent from the plan.
Takaichi has identified rising living costs as one of her administration’s top economic priorities, signaling a preference for targeted relief rather than sweeping fiscal stimulus. While known for her earlier backing of aggressive monetary and fiscal expansion, she has recently shifted toward what she calls “expansionary but responsible” economic policies.
Her administration faces the challenge of balancing support for growth with fiscal prudence amid Japan’s soaring public debt and mounting borrowing costs. Consumer inflation has remained above the Bank of Japan’s 2% target for more than three years, even as the central bank gradually tightens monetary policy.
On Tuesday, Takaichi said she hopes inflation will increasingly be driven by wage growth rather than rising import and energy costs.
Beyond inflation relief, the upcoming package will focus on strengthening Japan’s economic security and defense capabilities. It will include investments in strategic sectors such as artificial intelligence and semiconductors, as well as measures to secure supply chains for essential goods.
The initiative is also expected to contain responses to recent U.S. tariff actions. Japan has pledged to invest $550 billion in key U.S. industries in exchange for tariff reductions, part of a broader economic cooperation framework announced earlier this year.
