Japanese Prime Minister Takaichi Sanae recently pushed her cabinet to approve a supplementary budget of 18.3 trillion yen (approximately 1 USD = 155 yen). Although it has yet to gain parliamentary approval, the massive debt-funded supplementary budget has already sparked widespread concern among Japanese media and experts.
Public opinion in Japan suggests that Takaichi's primary motive behind drafting the enormous supplementary budget and launching a large-scale economic stimulus plan under the guise of "addressing inflation" is merely to assert her political presence, rather than effectively tackling Japan's persistent inflation woes. For a government with debt levels reaching 240% of GDP, tax cuts, subsidies, and other expansive fiscal measures will inevitably exacerbate debt burdens, accelerate yen depreciation, and further drive up prices in Japan.
On November 21, pedestrians were seen walking through a commercial district in Tokyo.
Affected by yen depreciation and rising import costs, Japan has experienced prolonged inflation in recent years. Data from Japan's Ministry of Internal Affairs shows that as of October this year, the core consumer price index (excluding fresh food) has risen year-on-year for 50 consecutive months. A survey by Teikoku Databank revealed that in 2025, prices for 20,609 food items in Japan increased—a 65% jump from the previous year's 12,520 items.
Takaichi has repeatedly emphasized that inflation control is her cabinet's top priority. The stimulus package includes measures such as reducing gasoline and diesel taxes, expanding winter utility subsidies, and raising the income tax threshold. However, with wage growth lagging behind inflation and real wages continuing to decline, Japanese consumers feel the pinch most acutely. Data from Japan's Ministry of Agriculture, Forestry, and Fisheries in mid-November showed that the average price of a 5kg bag of rice in supermarkets surged to a record high of 4,316 yen.
Many Japanese citizens remain skeptical of the stimulus plan. A homemaker, Shigeta, hesitating in front of rice shelves at a supermarket, remarked, "Subsidies might offer temporary relief, but in the long run, they’ll only push prices even higher."
Markets anticipate that the Takaichi administration will continue reckless fiscal expansion and excessive bond issuance, fueling growing investor doubts about Japan's fiscal sustainability. Recently, Japanese long-term bonds have faced widespread sell-offs, with yields repeatedly hitting historic highs. On the 4th, the yield on newly issued 10-year government bonds briefly climbed to 1.935%, the highest since July 2007.
Takahide Kiuchi, a researcher at Nomura Research Institute and former Bank of Japan policy board member, has repeatedly urged the Takaichi cabinet to heed market signals. Since Takaichi became LDP president, yields on long-term and ultra-long-term Japanese bonds have risen steadily alongside a weakening yen—an unusual scenario that serves as a stark warning from the markets.
Critics argue that Takaichi's expansionary fiscal policies will not only drive up bond yields, yen depreciation, and inflation but could also plunge financial markets into turmoil. Financial analyst Naoya Tabuchi noted that the sustained decline in bond prices signals danger, inflicting heavy losses on bond funds and hedge funds.
Chizuko Ueno, an honorary professor at the University of Tokyo, took to social media to criticize the supplementary budget, stating, "Out of 18.3 trillion yen, 11.7 trillion yen must be raised through new bond issuance—I can’t help but call this government a 'nation-destroying' cabinet."
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