Japan PM Sanae Takaichi’s Approval Rating Falls Amid Inflation Pressures

A Yomiuri newspaper poll conducted between July 24 and July 26 showed Prime Minister Sanae Takaichi’s approval rating fell to 57 %, down from 69 % in June. The disapproval rate rose to 34 % from 21 %, and the share of respondents who believed the administration was not doing enough to curb rising living costs increased to 71 % from 56 %. The poll marked the first time the rating slipped below 60 % since Takaichi took office in 2025.

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Takaichi’s government has pursued an expansionary fiscal and monetary stance, including a pledge to cut an 8 % levy on food sales to ease cost pressures. The policy mix has coincided with a sharp rise in Japanese government bond yields and a four-decade low yen, intensifying market concerns.

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The Bank of Japan (BOJ) raised its policy rate to 1 % in June—the highest in 31 years—yet real borrowing costs remain negative because inflation has hovered near the BOJ’s 2 % target for almost four years. Government fuel subsidies have helped keep core consumer inflation below the target for a fifth consecutive month.

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• Core CPI (June): +2.7 % year-on-year (includes energy, excludes fresh food).

Japan core inflation estimated at 2.7% in June, similar to May - BOJ data

• Core-core CPI (June): +2.0 % year-on-year (excludes energy).

Japan core inflation estimated at 2.7% in June, similar to May - BOJ data

• Trimmed-mean inflation estimate (June): 1.6 %, a slight rise from 1.5 % in April and May.

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• Producer-price surge: Analysts expect core inflation to climb back above 2 % later in the year as higher producer prices filter through.

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• Yen: Reached a 40-year low against the dollar in July, amplifying import-cost pressures.

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Kenji Yamamoto, chief market economist at Daiwa Securities, noted that while Takaichi’s approval remains higher than that of many past administrations, the political capital she gained from the lower-house election is “gradually diminishing.” He emphasized that the upcoming cabinet reshuffle—rumored for August or September—will signal the government’s direction on reflationary policies.

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Government officials have not yet announced a decision on the 8 % food-levy cut, citing ongoing debates within the ruling Liberal Democratic Party and the need to assess inflation trends.

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• “Her approval ratings remain high compared to past administrations so it's not as if Takaichi's political grounding is shaking,” — Kenji Yamamoto, chief market economist at Daiwa Securities

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• The BOJ is scheduled to hold a two-day policy meeting ending on Friday (date not specified), where it is expected to keep the policy rate at 1 % but signal openness to further hikes. Analysts project a possible increase to 1.25 % by December, with a chance of an earlier move in September or October if inflation pressures intensify.

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• A cabinet reshuffle is anticipated in August or September, which could reshape the administration’s approach to fiscal stimulus and inflation management.

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No major discrepancies appear among the sources regarding the poll figures or inflation data. However, the precise timing of any future BOJ rate hike remains uncertain, as the central bank has not committed to a specific schedule.

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