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TOKYO : The Japanese government has unveiled an economic stimulus package valued at US$107 billion.
The announcement came after data out on Friday showed that Japan's consumer prices rose 2.4 per cent in July, faster than market expectations and compared with 1.9 per cent the previous month.
It was the 10th straight month of increase, and also the fastest growth rate in 10 years. Fuelling the rise was an almost 29 per cent jump in petroleum costs.
Meanwhile, household spending fell 0.5 per cent in July compared to a year ago.
Rising inflation is raising concerns in Japan because it has been driven entirely by rising import costs rather than a stronger domestic economy.
The latest gross domestic product figures for the April-June quarter showed that Japan's economy contracted at an annualised pace of 2.4 per cent.
In order to help the public cope with higher prices, the Fukuda government has agreed to form an US$107 billion economic stimulus package.
A large part of the money will go to medium- and small-sized firms. The government also plans to cut expressway tolls, and reduce costs of imported wheat to help farmers.
Prime Minister Yasuo Fukuda does not intend to use debt covering bonds for the supplementary budget, considering Japan's huge fiscal debt.
Some have said the package is aimed at pleasing the public ahead of a general election, as the government intends to consider tax breaks for incomes and other kinds of taxes within this fiscal year.
The good news on Friday was that Japan's industrial output rose by 0.9 per cent in July from the previous month. This was much better than the market forecast of minus 0.2 per cent. - CNA/ms
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