Japan PM Takaichi's Approval Rating Falls as Inflation Squeezes Households

Japan PM Takaichi's Approval Rating Drops to 42.5% Amid Inflation Woes

Japanese Prime Minister Sanae Takaichi's approval rating fell to 42.5% in a Yomiuri Shimbun poll conducted in early March, down from 49.1% in the previous survey. The decline reflects growing public discontent over rising consumer prices, which have outpaced wage growth and eroded household purchasing power. The poll, conducted from March 7-9, surveyed 1,000 eligible voters via telephone.

Only 26% of respondents said they feel the benefits of the government's economic policies, while 69% said they do not. The survey also showed that 58% disapprove of Takaichi's handling of the economy, underscoring the political risk posed by persistent inflation. Japan's core CPI rose 3.2% year-on-year in January, exceeding the Bank of Japan's 2% target and pressuring the central bank to consider further rate hikes.

Key Drivers Behind the Approval Rating Slide

Inflation Squeezes Household Budgets

The primary factor behind the decline is the rising cost of living. Food and energy prices have surged, with rice prices jumping 70% year-on-year in January, according to government data. Wage growth has lagged, with real wages falling for 22 consecutive months through December, despite nominal pay increases. This disconnect has fueled public frustration, as many households struggle to make ends meet.

Policy Response Under Scrutiny

Takaichi's administration has implemented measures such as subsidies for gasoline and utilities, but critics argue these are insufficient. The Bank of Japan's gradual tightening—raising short-term rates to 0.5% in January—has added to borrowing costs without taming inflation. The poll suggests that voters are losing confidence in the government's ability to manage the economy, with 58% disapproving of Takaichi's economic stewardship.

Key Levels and Assets to Watch

Traders should monitor the Japanese yen (JPY) and Nikkei 225 index for volatility. A sustained drop in approval ratings could fuel speculation of early elections, potentially weakening the yen as political uncertainty rises. The USD/JPY pair is currently trading near 148, with resistance at 150 and support at 145. The Nikkei 225, which has rallied 18% year-to-date, may face headwinds if consumer confidence deteriorates further. Check real-time prices on our live price page.

The Bank of Japan's policy path remains a key variable. If inflation persists, the BOJ may hike rates again, which could strengthen the yen but weigh on equities. Use our technical indicators to track momentum shifts.

What This Means for Traders

The political backdrop adds a layer of complexity for yen traders. A falling approval rating often precedes policy paralysis or snap elections, both of which can trigger yen weakness. Historically, the yen tends to depreciate during periods of political uncertainty, as seen in 2020 when Shinzo Abe's approval slid. However, if Takaichi responds with aggressive fiscal stimulus, it could boost the Nikkei but pressure the yen further.

For bond traders, the JGB yield curve is steepening, with the 10-year yield at 1.2%. A dovish pivot from the BOJ to support Takaichi's approval could cap yields, while a hawkish stance to fight inflation would push them higher. Our signal rooms offer real-time analysis of these cross-asset dynamics.

Risk factors to watch: any escalation in global trade tensions or a sharp slowdown in China could exacerbate Japan's economic woes. Conversely, a strong spring wage negotiation outcome (Shunto) might boost consumer sentiment and stabilize approval ratings. New to forex? Take our trader personality quiz to find your style.