Japan to Gradually Scale Back Fuel Subsidies Starting December

Prime Minister Sanae Takaichi announced on October 29 that the Japanese government will gradually scale back fuel subsidies beginning in December and continuing into early spring. Under the new plan, the benchmark retail price for petrol will increase by 5 yen per litre each month.

The decision follows a period of heavy government spending, estimated at 1.2 trillion yen between mid-March and September. These funds were used to protect consumers from energy shocks resulting from the war between the United States and Iran. Japan has faced rising costs as refiners shifted away from Middle Eastern crude oil, which previously accounted for over 90 percent of its supply, toward more expensive alternatives from the United States.

To mitigate the impact of the fuel subsidy cuts, the government will introduce electricity and gas bill subsidies a month earlier than planned. Starting in December, these measures will provide typical households with approximately 7,000 yen in relief through February.