Economy Japan's government approves up to 42% hikes in household electricity prices

thomas · 16 May 2023

The Japanese government has permitted seven prominent power companies to increase household electricity prices in the country. This decision is expected to contribute to the overall inflation rate. The extent of the price hikes will range from 14% to 42%. Tokyo Electric Power Company Holdings has received approval for the smallest rate increase among the regional utilities. Japan, facing a scarcity of resources, has been heavily impacted by the global energy crisis, leading to a surge in the costs of importing fossil fuels for power generation. As a result, higher electricity bills will further contribute to rising prices.

The power hikes could raise inflation by as much as 0.42 percentage point, according to former BOJ board member Takahide Kiuchi, an economist at Nomura Research Institute. Japan's key inflation rate was 3.1% in April. While the BOJ expects it to weaken below 2% in the second half of the fiscal year, which began last month, the longer it remains above that target, the more likely speculation of possible policy change will smolder on. The latest hikes are likely within the BOJ's expectations, according to Taro Saito, head of economic research at NLI Research Institute. Still, for most consumers electricity bills are likely to continue falling from a year ago as lower oil and natural gas prices outweigh the higher rates. Additionally, government subsidies that took effect earlier this year have held down retail costs.

Japan approves up to 42% increase in household electricity prices

Seven of Japan’s major energy providers will raise household their prices from June, in a move likely to add to inflation.

www.japantimes.co.jp

Majestic · 17 May 2023

I saw that on the news yesterday and I couldn't quite believe what I was hearing. But then further in the article it mentions

Still, for most consumers electricity bills are likely to continue falling from a year ago as lower oil and natural gas prices outweigh the higher rates. Additionally, government subsidies that took effect earlier this year have held down retail costs.

So I am slightly confused at how this "higher rates but lower prices" thing works out.

Economy Japan's government approves up to 42% hikes in household electricity prices

thomas

Unswerving cyclist

Japan approves up to 42% increase in household electricity prices

Majestic

先輩

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