Japan will urge oil producers to increase output and take steps to cushion the blow to industries hit by the recent spike in energy costs, Prime Minister Fumio Kishida said on Monday.

Kishida said he has instructed his cabinet to take “necessary action flexibly” to ease the pain from higher oil prices, highlighting a growing concern among policymakers over the potential damage to Japan’s fragile economic recovery.

“We’re closely watching the impact oil price moves have on the domestic industry and people’s livelihood,” Kishida told reporters.

Global commodity inflation and a weak yen have pushed up the cost of raw material imports for companies, adding to woes for the world’s third-largest economy that has seen exports and output impacted by supply chain disruptions in Asia.

Japan’s core consumer inflation remains stuck around zero, as companies are wary of passing on higher costs to households because of weak consumption.

But prices of food and gasoline are creeping up ahead of a lower house election on Oct. 31, heightening challenges for Kishida in meeting his pledge to revitalise the economy and distribute more wealth to households.

Reuters