Soaring food bills pose risk to Japan PM Takaichi’s election prospects

TOKYO - A key issue on the minds of voters heading into Japan’s national election on Feb 8 will be their stomachs, that is, the rising cost of filling them.

Voter frustration over soaring living expenses led to major setbacks for Prime Minister Sanae Takaichi’s ruling Liberal Democratic Party (LDP) in the last two national elections before she took the helm last October.

While successive governments rolled out subsidies to reduce utility fees during that timespan, outsized gains for food prices limited the overall impact of the aid on household budgets.

Ms Keiko Sato, 81, who lives in rural Akita, northern Japan, said she has started reducing purchases of non-crucial items, including clothes, because “there’s no real breathing room” in her budget.

“When I shop at regular supermarkets, things are so expensive that I just pull my hand back and don’t buy anything,” she said.

It is a big issue for Ms Takaichi ahead of a national election on Feb 8 that will make or break her government.

Increases in food prices played a large role in keeping consumer inflation above the Bank of Japan’s (BOJ) 2 per cent target for the last four years, sharpening the focus on this area of spending.

As she risks her job to pursue a fresh mandate, Ms Takaichi has sought to get ahead of this issue by promising to accelerate discussions on suspending the 8 per cent tax on purchases of food and non-alcoholic beverages for two years if she prevails.

Spending by households, adjusted for inflation, fell 2.6 per cent in December compared with a year earlier, the Ministry of Internal Affairs and Communications reported on Feb 6.

Economists had expected a 0.3 per cent decline. Outlays for transportation and communication declined by an adjusted 7.1 per cent, while those for shoes and clothing dropped 8.9 per cent, and food outlays slipped by 2.4 per cent.

Even as overall spending dipped, Japanese households continued to devote an increasing portion of their spending to food. In December, the proportion of outlays allocated for food, known as the Engel coefficient, came to 30.7 per cent of the total. That is up from 28.9 per cent in November, the highest percentage for that month in comparable data available since 2000. 

People in Japan allocate more of their spending to food than those in other developed economies. Families in the US allocated only 15 per cent of total spending to food in 2023, according to the Organisation for Economic Cooperation and Development. Cultural norms related to food can influence the coefficient, while countries with lower average incomes tend to have higher readings.

Surveys show inflation is among the most important issues for voters ahead of the Feb 8 polls. Some 54 per cent cited it as their biggest concern, according to a Nikkei survey released last week.

Ms Kazue Iwata, 74, who lives on a fixed pension, said she has had to cut back on leisure spending. “I really feel prices rising in everyday life – groceries, clothes and especially rice,” she said. “I’m living on a pension, so even if I want to travel, I just can’t.”

Opposition parties have taken notice and hammered out their own plans for lowering living costs. The newly formed Centrist Reform Alliance, the largest opposition camp, aims to go a step further than the LDP by ending the sales tax on food permanently. The Democratic Party for the People proposes cutting the overall consumption tax to 5 per cent, and Sanseito has pledged to flat out abolish the consumption tax.

“Almost all parties are now calling for consumption tax cuts, and that has been cited as one factor behind the weaker yen,” said senior economist Hikaru Sato at Daiwa Institute of Research. “If a tax cut lasts only one year, it may have an impact in the data, but over the medium to long term, such measures are unlikely to have much effect” on lowering the Engel coefficient, he added.

The proposal to cut tax on food sales has broad support from consumers and food retailers. The Japan Chain Stores Association is urging Ms Takaichi to stretch the suspension to five years, the Nikkei reported in January.

The restaurant industry, on the other hand, has voiced concerns that consumers would choose to eat more meals at home and cut back on dining in restaurants, where spending would still be subject to the 10 per cent consumption tax.

There are indications that food price inflation will moderate in the coming months, partly due to comparisons with the fast pace of growth in 2025. The latest inflation data showed that gains in food prices slowed to 5.1 per cent in December from 6.1 per cent a month earlier. 

Rice price gains decelerated that month to 34.4 per cent from 37.1 per cent. While that is far below the record doubling of prices in June and July 2025, it is still onerous in a nation where real wage growth was negative every month through November 2025, with December data due on Feb 9.

The number of price increases by Japan’s major food companies reached 20,609 in 2025, about 60 per cent more than in the previous year, Teikoku Databank reported in December. For the first four months of 2026, the number of price increases was expected to total about 3,600, about 40 per cent fewer than a year earlier, it said.

BOJ governor Kazuo Ueda has said he expects inflation to cool in the coming months.

That projection is of little help to housewife Yoko Sasaki, 51, who said the proportion of food costs in her monthly household budget is “frightful” even though her children are grown up and have moved out.

“Although the volume decreases, the price is the same,” said Ms Sasaki, who was attending a rally in Saitama where Ms Takaichi was speaking. “I’m trying to find cheaper options.”

The yen is another factor to watch. Japan imported over 60 per cent of its food needs last fiscal year, according to the Ministry of Agriculture, Forestry and Fisheries. With Japan’s currency trading around 157 to the dollar as at Feb 5 in Tokyo, it could keep upward pressure on the costs of imports. The yen’s 20-year average is around 111.83.

“Japan’s low food self-sufficiency rate has essentially remained unchanged for several decades,” said Daiwa’s Mr Sato.

“While the government is making efforts, those have not been reflected in the actual numbers. As a result, when currencies move sharply, as they have recently, it becomes easier for the Engel coefficient to rise” through import-driven inflation. BLOOMBERG