Inflation Fires Up Populism, Erodes Political Stability; Rising Food Prices Bode Ill for Incumbent Government

Yomiuri Shimbun

16-05-2025

Yomiuri Shimbun file photo
Prime Minister Shigeru Ishiba, right, addresses a meeting of the Council on Economic and Fiscal Policy about wage increases at the Prime Minister's Office in March.
Over 100 years ago in Japan, a shortage of rice and a steep rise in its price caused a great uproar for about a month. This has been called the Kome Sodo, or rice riots. Although Japan at the time was not a democratic country, the turmoil adversely affected politics, causing the government of the day to fall.
Present-day Japan is not the same country it was a century ago, and nothing like a desperate clamor for food will happen. But it is true that not only rice but most daily commodities have increased in price, which has diminished the popularity of the government. An opinion poll conducted by The Yomiuri Shimbun in September showed that more than 90% of respondents felt that rising prices were a burden on households. Those who felt so gave Prime Minister Shigeru Ishiba a low approval rating.
This should be no surprise. At least as far back as the French Revolution, which broke out amid fierce inflation, people suffering severe price increases have been apt to feel anger and distrust toward their governments. Even in recent years, we have seen similar situations in various countries. After the start of the war in Ukraine and economic recovery from the COVID-19 crisis, a sharp increase in energy and food prices put the world economy in turmoil, damaging the political standing of world leaders, especially in 2023 and 2024, and leading to changes in short-lived governments.
A simple illustration of this pattern is the lineup of national leaders attending the annual Group of Seven summit. At the three summits through 2019, before the pandemic, only two of the leaders were replaced.
But, 11 months after the latest G7 summit, held in June 2024 in Italy, only French President Emmanuel Macron and Italian Prime Minister Giorgia Meloni still remain in their positions. The other five leaders had been criticized for not dealing with inflation, with some being defeated in their national elections, while others gave up on reelection bids and stepped down because they felt less likely to win. One of those was then U.S. President Joe Biden, who met a fate similar to that of his predecessors Gerald Ford and Jimmy Carter, both of whom were in office during the oil shock era of the 1970s and failed in their bids to win another term.
In Japan, too, the ruling Liberal Democratic Party and its coalition partner Komeito suffered severe setbacks in the House of Representatives election held in October 2024. In addition to issues of money in politics, many voters held the LDP administration responsible for economic hardship caused by rising prices.
However, inflation is triggered not only by domestic policies but also by exogenous factors such as wars in distant lands, which are beyond the realistic control of governments not a party to them, making it unfair for opposition parties to place the blame for inflation on the incumbent administration.
Japan's consumer prices in fiscal 2024 rose 3% from the previous year. Because the Japanese economy had been in lingering deflation for more than three decades, inflation started later than in other countries. Also, rising labor costs due to a decline in the working-age population will surely continue to bump up prices.
Ishiba's administration has no immediate and easy remedy to counter structural inflation without worsening economic conditions. I am sure that Ishiba is afraid of criticism from voters that he lacks an effective economic policy. He has given up on his longtime policy regarding budget discipline. So far, his administration has done nothing but expand government expenditures to ease the grievances and fears of the people.
Another challenging factor is the unpredictable tariff policy of the U.S. government led by President Donald Trump. The policy may be negotiable, but the Japanese government should brace for Trump's flip-flopping, which has been happening very often.
Now, Ishiba's minority government consisting of the LDP and Komeito seems to have no other option but to concede to louder voices from the opposition demanding lower tax burdens, even though some economists argue that tax cuts and cash handouts are not desirable ways to deal with inflation. Nearly all parties have been swayed by an economic populism that focuses on short-term benefit.
This is not unique to Japan, but it is not too much to say that it is deplorable that so many politicians are downplaying the serious truth that Japan has huge financial deficits and that large-scale tax cuts will be paid for by future generations that are becoming smaller than the ones preceding them. The immediate political situation, with the House of Councillors and Tokyo Metropolitan Assembly elections both to be held this summer, has reinforced this tendency.
One of Ishiba's mentors was Kakuei Tanaka, who served as prime minister from 1972 to 1974 and struggled with skyrocketing prices after the oil shock. To counter this inflation, Tanaka introduced sweeping tax cuts and expanded social security spending, including pension benefits and medical costs for the elderly. Unfortunately, Tanaka's measures to stimulate demand made consumer prices even higher in 1974.
The Tanaka-led LDP conducted a vigorous campaign for the upper house election, but the party was defeated. Although the Tanaka administration had a solid majority of seats in the lower house, his popularity had been damaged by a money scandal and he was forced to resign a few months later. This demonstrates that those who take incorrect measures against inflation to simply please voters are likely to lose on both fronts.
In contrast to Tanaka, who had been a leader of a large faction in the LDP, Ishiba has a weak political base. No one knows how long he can remain in office. In any case, he or his successor will be haunted by the possibility of a 21st-century version of Kome Sodo. If that happens, all they can do is to choose whether to be criticized for a lack of strategy or to concede to populist policy and repeat the costly mistakes of 1974.
Political Pulse appears every Saturday.
Takayuki Tanaka
Takayuki Tanaka is the president of The Yomiuri Shimbun, Osaka. His previous posts included managing editor of The Yomiuri Shimbun, Tokyo.