TOKYO - The exchange of attacks between the United States and Iran following the reported downing of a U.S. Army helicopter by Iran is continuing to affect daily life in Japan, with higher energy prices raising concerns that inflationary pressures could spread further across the economy.
While negotiations aimed at ending the fighting are ongoing, the outlook remains uncertain, and the prolonged conflict is increasing fears of sustained increases in fuel and utility costs.
Japan remains heavily dependent on energy imports from the Middle East, with about 80% of its crude oil imports coming from the region as of April. The recent surge in crude oil prices has already pushed up gasoline costs, although government subsidies have helped soften the impact on consumers.
As of June 8th, the national average price of regular gasoline would have reached 202 yen per liter without government support measures. Subsidies have reduced the average retail price to 169 yen.
If the conflict continues, however, gasoline prices could begin rising again despite the government's efforts to contain costs.
Electricity and gas bills are also expected to climb in the coming months because fuel price increases are typically reflected in utility charges with a delay. The impact is forecast to become more noticeable from summer through autumn.
Higher energy costs could eventually extend beyond households and affect a wide range of businesses, including sports gyms, tutoring schools, and other facilities, potentially leading to higher service fees for consumers.
Data on average gasoline prices suggest that, without subsidies, fuel prices in Japan would already be well above 200 yen per liter, a level that has become common in many other countries.
The government has continued to provide subsidies to keep prices lower, partly because fuel costs are closely linked to public support for the administration. However, the subsidies are funded through taxpayer money, raising questions about their long-term sustainability.
Economic commentator Nikuyo Nikunokoji said that while some level of assistance may be necessary, maintaining prices at a fixed level through subsidies indefinitely would become increasingly difficult if the conflict drags on.
Further price increases may spread throughout the economy. Naoko Kuga, a senior researcher at the NLI Research Institute, said more goods and services are likely to face price hikes, making it harder for prices to stabilize and increasing the possibility that inflation will persist.
Nikunokoji also noted that rising corporate goods prices are likely to be reflected in consumer prices in the future, suggesting that households could face additional cost pressures in the months ahead.
Source: TBS
