The Japanese government is set to deploy a multi-billion yen subsidy program this Thursday to combat a record-breaking spike in gasoline costs. On March 16, the national average reached 190.8 yen per liter, a staggering increase from the previous week. The intervention, totaling 30.2 yen per liter, is designed to prevent a wider economic slowdown by capping costs for families and the logistics industry.
Prime Minister Takaichi’s administration acted quickly after West Asia’s conflict disrupted the global oil supply chain. The closure of the Strait of Hormuz has essentially halted a significant portion of the crude destined for Asian markets. Consequently, Japanese wholesalers were forced to hike prices by 26 yen per liter almost overnight.
Despite the subsidy starting March 19, the Oil Information Center notes a delay at the pump. Retailers who bought expensive stock recently cannot afford to lower prices until that inventory is sold. Experts estimate it will take approximately 14 days for the national average to retreat toward the target of 170 yen.
The current price of 190.8 yen eclipses the prior peaks of 186.5 yen seen in late 2023 and early 2024. For the past several months, fuel had been affordable at 155 yen due to the abolition of a long-standing tax surcharge. However, the direct military confrontation in Iran has completely reversed those gains, threatening the government’s inflation targets.