THE ASAHI SHIMBUN
May 31, 2024 at 18:46 JST
Household energy bills are set to increase yet again from July with the end of a government subsidy program, which will deal a blow to families already struggling with rising prices.
For the average household, the increase will be in the range of 346 yen to 616 yen ($2.21 to $3.93) a month for electricity, and 95 yen to 121 yen for gas, according to a May 30 announcement by the nation’s 10 leading utilities and four major gas companies.
The end of subsidies alone will add around 450 yen a month to electricity prices and 200 yen to gas bills.
However, the increases should be slightly lower by the time July comes around due to falling prices of liquefied natural gas, the primary power source for Japan’s thermal plants.
The subsidy program began in February 2023 to help households cope with rising energy costs triggered by Russia’s invasion of Ukraine.
As the subsidy amount has since been gradually reduced, electricity bills will go up by an average of 1,070 yen to 2,428 yen in July compared to the same month last year. Similarly, gas bills will rise by 256 yen to 601 yen. Many households pay considerably more.
Separately, the major electric utilities, except for Kansai Electric Power Co., Chubu Electric Power Co. and Kyushu Electric Power Co., have raised rates by an average of 16 to 41 percent since July last year.
In addition, a monthly surcharge for promoting renewable energy, which is automatically added to electricity bills, was also increased from April.
The end of energy subsidies is likely to reignite simmering inflation, hitting households hard.
The consumer price index is expected to show a 2.5 percent year-on-year rise in the first quarter of 2024, according to a forecast by 38 economists released by the Japan Center for Economic Research.
For the second quarter, the CPI is forecast to rise by 2.57 percent and by 2.76 percent in the third quarter. The inflation rate peaked at 4.2 percent in January last year but has since slowed due to the subsiding rise in food prices.
The figure for April this year was 2.2 percent, approaching the Bank of Japan’s target of 2 percent.
However, Taro Saito of the NLI Research Institute said he and other experts believe that the rising energy costs this summer could push up inflation by around 1 percent. This could be enough to offset the recent slowdown in inflation.
Economists predict that inflation will slow again in the fall and shrink to around 1 percent by next summer. However, if the yen weakens further and import costs are passed on in the form of higher prices, inflation could be around for considerably longer.
(This article was written by Jumpei Miura and Hisashi Naito.)
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Tokyo Gas Co., pictured, and other utilities have announced price increases starting July. (Asahi Shimbun file photo)
