Japanese Cabinet Approves $135 Billion Stimulus

The bundle of measures from Japan's fifth premier in as many years was worth 21.3 trillion yen ($135 billion) including energy subsidies and tax cuts.

Takaichi came to power last month with a pledge to fight inflation as anger over rising prices helped undo her predecessor, Shigeru Ishiba, who was in office barely a year.

But Takaichi's package has stoked fears about adding to Japan's already colossal debt pile, sending government bond yields to record highs and the yen lower against the dollar.

A weaker yen raises prices of imports for resource-poor Japan, which relies heavily on foreign food, energy and raw materials to power its economy..

"Japan has been engaged in expansionary economic policies for so long without being able to stimulate the economy," said Margarita Estevez-Abe, an analyst at Syracuse University's Maxwell School.

"Meanwhile, Japan's public debts increased. We are already seeing the negative reactions from the market... Further depreciation of the yen will hit ordinary Japanese households with higher prices," she told AFP. 

Official data earlier showed core inflation, which excludes fresh food, rose 3.0 percent year-on-year in October from 2.9 percent in September.

Illustrating the pain for consumers, rice prices were 40 percent higher than last year, although the rate of inflation for the staple has slowed considerably in recent months.

The reading came days after figures showed the economy shrinking 0.4 percent in the third quarter, the first contraction since the first three months of 2024.