TOKYO - A surge in prices is hitting local festivals across Japan, with the centuries-old Chichibu Night Festival, one of the nation’s three major float festivals, reducing its traditional fireworks program by 200 shots after pyrotechnic costs soared, as the Highashi administration rolls out inflation countermeasures that aim to support households but have prompted concerns that they may end up accelerating inflation instead, raising questions about how these policies will ultimately affect everyday life.
The Chichibu Festival, which began today and boasts a history of more than 350 years, is already feeling the strain of rising raw material prices. Organizers say the cost of gunpowder used for each large shell has climbed by more than 20,000 yen over the past two years, making it difficult to maintain previous years’ volumes.
Price pressures are also evident at food stalls lining the festival grounds. One vendor selling obanyaki raised prices by 50 yen last year, explaining that the cost of flour and sugar has climbed across the board. The vendor said they have held prices steady again this year to attract more customers, even though profitability is shrinking. Another stall selling fried noodles raised its price from 500 yen last year to 600 yen this year, saying that the intention was always to keep it at 500 yen but that rising costs made it impossible.
In Chichibu, the city has begun distributing rice to residents from August as a local measure to ease the impact of inflation. At the national level, the government is rolling out support such as subsidies for rice and electricity and gas bills, though expectations among households appear muted. Residents expressed concerns that the planned phaseout of the temporary gasoline tax reduction will hit car-dependent regions hard, saying that even with support, rising expenses outpace income and any assistance is quickly consumed, leaving daily life largely unchanged.
Inflation is also impacting year-end and New Year dining tables. One resident said rising prices for cakes have become noticeable ahead of Christmas next month, adding that they plan to forgo a holiday cake this year. A shop in Fukuoka raised the price of its 15-centimeter whole cake by 100 yen to 4,900 yen, reflecting higher ingredient costs. According to Teikoku Databank, the average price of Christmas cakes continues to rise due to surging raw material expenses.
Amid these trends, a simple cake from Lawson, stripped of decorative toppings to keep prices down, is gaining popularity. The price is roughly half that of strawberry-topped cakes, and reservations are up 1.7 times compared with last year.
Osechi dishes are also becoming more expensive. A prepared-food manufacturer based in Aichi Prefecture raised the price of its three-tier osechi set by 1,000 yen as the cost of ingredients for 33 items, as well as decorative boxes, pouches, and lacquered tiers, has increased.
The government’s supplementary budget, which includes inflation countermeasures, totals 18.3 trillion yen, more than half of which—11.6 trillion yen—will be financed through government bonds. The Fiscal System Council submitted its opinion paper to Finance Minister Katayama today, urging the government to secure stable funding sources while ensuring market confidence in Japan’s fiscal policy, warning against overly expansionary spending.
If markets lose trust in Japan’s fiscal management, the yen could weaken further. A weaker yen would make imported food and energy more expensive, accelerating inflation. Ironically, fiscal measures designed to offset rising prices could end up fueling even higher inflation.
At the Diet today, the LDP’s tax panel convened for discussions under the new political leadership. The focus has turned to tax cuts, with the income-cap threshold already raised to 1.6 million yen and further increases to 1.78 million yen—proposed by the Democratic Party for the People—estimated to cost around 2 trillion yen in reduced tax revenue. Eliminating provisional gasoline and diesel tax rates would result in another 1.5 trillion yen in tax cuts.
Finance Ministry officials warn that while the fiscal losses are substantial, the government and ruling parties may perceive political gains. Although the ruling coalition holds a majority in the Lower House, it lacks a majority in the Upper House, making opposition support essential. Lawmakers caution that unless tax cuts are accepted, parliamentary business could stall, incentivizing policies that are popular with voters but defer heavier financial burdens such as tax increases, potentially leading to inflation driven by worsening fiscal health.
Of the 18.3 trillion yen in the supplementary budget, roughly 9 trillion yen is allocated to inflation countermeasures. Around 64% of the overall package will be financed through new bond issuance, raising concerns that the approach could contribute to further inflation and a weaker yen. Commentators argue that relying heavily on bond-funded supplementary budgets is unprecedented and increasingly risky, especially as long-term government bond yields continue to rise.
According to analysts, Finance Ministry officials say they are nervous each Monday as markets open, noting that the trend appears to be moving in the opposite direction of maintaining market confidence. Without securing stable funding sources, even well-intentioned policies risk becoming ineffective because the government’s financial foundation is growing unstable.
Observers question why lawmakers are not raising stronger concerns about fiscal sustainability, saying that explanations from policymakers lack clarity about long-term outlooks. Critics argue that resorting to bond issuance whenever funding falls short is no longer tenable, particularly through supplementary budgets, calling it a troubling practice that extends beyond what responsible financial management should allow. They stress the need for alternative, more sustainable approaches to securing revenue.
Source: TBS
