Japan’s Prime Minister Sanae Takaichi is preparing to dissolve the country’s lower house on Friday, triggering a snap general election scheduled for 8 February, in a high-stakes bid to consolidate her authority as concerns over inflation and public finances weigh on voters and financial markets.
Takaichi, who became Japan's first female prime minister in October, announced earlier this week that she would seek a fresh public mandate for policies aimed at easing the cost-of-living squeeze and boosting defence spending. Her decision comes despite her ruling Liberal Democratic Party (LDP) facing weak approval ratings due to a series of political scandals.
The governing coalition, consisting of the LDP and the Japan Innovation Party, currently maintains a narrow majority in the powerful lower chamber. Allies of the prime minister believe her personal popularity could help secure a stronger parliamentary position, even as scepticism about the party itself persists.
Political analysts caution, however, that support for Takaichi as leader may not automatically translate into votes for the LDP. Hidehiro Yamamoto, a political science professor at the University of Tsukuba, said public sentiment remains focused on economic pressures rather than party loyalty, particularly the impact of rising prices on household budgets.
Fresh government data released on Friday showed consumer inflation eased slightly in December, helped by state subsidies for electricity and gas. Core consumer prices rose 2.4 per cent year-on-year, down from three per cent in November, though still above the Bank of Japan’s long-standing two per cent target.
Inflation has become a defining political issue in Japan, contributing to the downfall of Takaichi’s predecessor, Shigeru Ishiba. After decades of battling deflation, the country has faced a sharp increase in living costs, compounded by a weak yen that has driven up import prices. Staple foods have drawn particular attention, with rice prices surging dramatically last year before moderating. Official figures show rice remained more than 34 per cent higher in December compared with a year earlier.
In response, Takaichi’s cabinet has approved a record ¥122.3 trillion ($770 billion) budget for the fiscal year beginning in April 2026, aimed at supporting households and strengthening the world’s fourth-largest economy. Opposition figures argue that dissolving parliament now risks delaying the budget’s passage, potentially harming livelihoods at a sensitive moment.
The prime minister has also pledged to temporarily cut sales tax on food for two years if re-elected, a proposal echoed by opposition parties but criticised by some economists for adding to Japan’s already heavy debt burden. Public debt is projected to exceed 230 per cent of gross domestic product in the 2025–26 fiscal year. Takaichi has defended her approach as fiscally responsible, arguing that growth-supporting measures are essential.
Financial markets have reacted nervously. Japanese government bond yields have jumped this week, reflecting investor concerns about increased borrowing and fiscal discipline. The Bank of Japan, which has raised interest rates several times since early 2024 to curb inflation, is expected to keep rates unchanged at the end of a two-day policy meeting on Friday. We will closely scrutinise its assessment of market volatility.
Meanwhile, the opposition Constitutional Democratic Party has formed a new alliance with Komeito, branding itself the Centrist Reform Alliance to attract undecided voters. Analysts predict a tightening of the race, but most concur that the opposition still faces a formidable challenge against the entrenched LDP.
Youth voters may prove decisive. Recent polling suggests Takaichi enjoys strong backing among younger voters, with around 90 per cent of respondents under 30 expressing support for her government. Whether that enthusiasm carries through to election day could determine the scale—if not the certainty—of her victory.
