(MENAFN) The Japanese government is preparing a large-scale economic package worth more than ¥20 trillion ($129 billion) aimed at helping residents cope with persistently rising living expenses, according to a report by media organization on Wednesday.

The plan, which includes a series of relief measures such as a temporary cut to the gasoline tax, is expected to be formally approved by the Cabinet on Friday. The government will also compile an extra budget estimated at around ¥17 trillion ($109.2 billion), significantly higher than last year’s supplementary budget of ¥13.9 trillion ($89.3 billion).

The decision comes as Japan’s economy contracted for the first time in six quarters during the July–September period. Higher prices have dampened consumer sentiment and weighed on household spending, prompting the government to take additional action.

Under the upcoming package, Tokyo plans to offer subsidies to reduce electricity and gas bills for households during the first three months of next year. Officials say these steps are intended to cushion the immediate effects of inflation and provide temporary relief during the winter season.

Local governments will also receive financial assistance to implement their own tailored initiatives. These may include distributing rice vouchers or other forms of support to help residents manage soaring food and daily living costs.

The government hopes the comprehensive measures will stabilize consumer spending and provide momentum for the economy heading into 2025.

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