Rice Crisis Fuels 3.7% Inflation Spike, Shaking Japan PM Ahead Of Election
Japan's core inflation surged to 3.7% in May, placing fresh pressure on Prime Minister Shigeru Ishiba as his approval ratings continue to slide in the run-up to July's upper house elections.
Figures released Friday revealed that rice prices jumped a staggering 101% from a year ago, worsening despite government intervention. Authorities began releasing emergency rice stockpiles in February – a move previously reserved for disasters – to curb soaring prices.
Food inflation remained widespread. Costs climbed for various products, including processed items like coffee and chocolate. Meanwhile, electricity bills rose 11.3%, and gas prices increased by 5.4%.
The government attributed the spike in rice prices to a mix of adverse weather two years ago, hoarding behaviour by traders, and last year's panic buying following a government warning of a possible 'megaquake.'
Ishiba's response included a pledge of ¥20,000 (US$139) in cash handouts to all citizens, with children eligible for double the amount, aimed at easing the burden of rising costs.
Friday's inflation reading – which excludes fresh food – surpassed market expectations and marked an uptick from April's 3.5% rise. Economists warn that ongoing US tariffs and the conflict between Iran and Israel could push energy prices higher, adding further strain to the economy.
Earlier this week, the Bank of Japan opted to keep interest rates unchanged and announced a slower pace in tapering bond purchases, citing trade uncertainties as a growing risk.
Public dissatisfaction with Ishiba's ruling Liberal Democratic Party has intensified, with analysts pointing to cost-of-living concerns – particularly over rice – as a key factor driving voter discontent.
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