Japanese PM Candidate Koizumi Promises Wage Increase To Overcome Inflation

JAKARTA - Shinjiro Koizumi, who is running for Japanese Prime Minister next, promised on Saturday, September 20, 2025, to focus on economic revitalization by increasing wages and productivity to offset price increases.

Koizumi, seen as the leading candidate in the fight for the leadership of the ruling party, said Japan should shift its focus on economic policy from addressing deflation to policies that are more appropriate for the inflation era.

"The Japanese economy is in a transitional phase from deflation to inflation," Koizumi told a news conference announcing his candidacy for president of the Liberal Democratic Party (LDP).

"We must ensure wage growth increases with speeds that exceed inflation so that consumption becomes a driving force for growth," Koizumi said, adding that the economy would be a policy priority.

Regarding monetary policy, Koizumi hopes that the Bank of Japan (BOJ) will cooperate with the government to achieve stable prices and solid economic growth.

Koizumi and veteran fiscal expert Sanae Takaichi were seen as the main competitors in the party election on October 4, 2025 after Prime Minister Shigeru Ishiba decided to step down this month.

The next LDP leader will most likely become prime minister because the party is so far the largest in the lower house of parliament - even though LDP has lost a majority in the two panels under Ishiba so that the road is uncertain.

Koizumi said that if he became Prime Minister of Japan, his government would soon draw up a package of measures to reduce the economic impact of rising prices and submit additional budgets to extraordinary parliamentary sessions.

"While still paying attention to the need for fiscal discipline, we can use the increase in tax revenue from inflation to fund policies to achieve economic growth," he said.

Competition at the LDP has attracted strong attention from market participants and led to an increase in the proceeds of super extended government bonds with the view that the next leader could increase fiscal spending.

Investors are also focused on the views of candidates on monetary policy as BOJ is eyeing further increases in interest rates that are still low.

Takaichi previously criticized the increase in the BOJ interest rate, but did not comment on monetary policy at a press conference on Friday, September 19, 2025.

Koizumi said that if elected Prime Minister of Japan, his government would cut gasoline taxes, increase tax exemptions for households, and take steps to increase wages by an average of 1 million yen (USD 6,800/approximately IDR 113.2 million) in the fiscal year 2030.

He also promised to increase government support for company capital expenditures in order to increase Japanese manufacturing capacity.

"We need to build a strong economy supported by demand and supply growth," said Koizumi.