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Japan to draw up economic package in Oct. to fight inflation: Kishida

Prime Minister Fumio Kishida speaks to reporters at his office in Tokyo on Sept. 8, 2022. (Kyodo)

TOKYO (Kyodo) -- Japan will compile a new economic package in October to cope with rising prices caused by Russia's war in Ukraine and may draft a supplementary budget to fund it, Prime Minister Fumio Kishida said Thursday.

    "We will consider what steps to take in a comprehensive economic package to be compiled in October in consultation with the ruling parties," Kishida told reporters at his office. "Based on this, we will decide whether to form a supplementary budget at an appropriate time."

    Separately, the government will decide Friday on additional steps to soften the blow to households from accelerating inflation, according to officials, as Kishida has recently seen public support for his Cabinet dwindle in opinion polls.

    In late September, the government will tap around 3.5 trillion yen ($24 billion) in reserve funds for the current fiscal year to fund steps to cope with inflation and the COVID-19 pandemic, Kishida said.

    The relief measures include distributing 50,000 yen each to a few million low-income households exempt from paying resident taxes, which will cost around 900 billion yen.

    The government will also extend its subsidy program for oil wholesalers to lower retail gasoline prices beyond its current end-of-September deadline to December.

    To prevent a further rise in food prices, the government will maintain the price at which it sells imported wheat to millers.

    Russia's invasion of Ukraine has sent energy and food prices surging, a headwind for resource-poor Japan. A recent sharp drop in the yen is also amplifying the impact.

    Rising prices have become a sensitive issue for the administration and the ruling coalition.

    Kishida has been facing an uphill battle to win over voters amid controversy over whether the use of taxpayers' money is appropriate to hold a state funeral for former Prime Minister Shinzo Abe. He was fatally shot in July by a lone gunman, who believed Abe had links to the controversial Unification Church.

    The relationship between politicians, particularly those in the ruling Liberal Democratic Party, and the church has come under intense scrutiny. The assailant reportedly held a grudge against the religious group because his mother's donations to the church ruined the family's finances.

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