Defense spending is increasing, and Japan's total budget for 2025 will reach a record 115 trillion yen.
In the new budget proposal, the spending items with the largest increase include: a significant increase of over 10% in defense spending, reaching 8.5 trillion yen; and an approximately 7% increase in allocations to local governments. Due to record high tax revenues, the scale of newly issued government bonds will decrease by nearly one-fifth, down to 28.6 trillion yen.
Bank Of Japan Policymakers Divided On Rate Hike Timing
Inflation in Tokyo accelerated in December, and current utility subsidies are gradually being phased out.
Tokyo's inflation accelerated for the second consecutive month in December, as the government gradually phased out utility subsidies, which may support expectations for interest rate hikes next year. Japan's Ministry of Internal Affairs released data on Friday showing that consumer prices in Tokyo, excluding fresh food, rose by 2.4%, up from 2.2% the previous month. This figure is the highest since August, but slightly below economists' expectations of 2.5%. The acceleration in inflation is primarily due to rising energy prices following the gradual removal of Henry Hub Natural Gas and electricity subsidies. Tokyo's inflation data is often considered a leading indicator of nationwide inflation trends in Japan. Additional data showed that the labor market remained relatively stable in November.
Japan's Economic Recovery Continues But Progress Tentative, Uneven
Tokyo Inflation Accelerates as Subsidies Phased Out For Now
Breaking: Japan's Tokyo CPI Inflation Rises to 3.0% YoY in December Vs. 2.6% Prior