Japan's government has announced an economic stimulus package worth more than $100 billion to tackle the fastest inflation in a decade and the looming threat of a recession.
The plan includes measures to help consumers, companies and farmers cope with high fuel costs and a credit crunch.
With lending-related measures accounting for much of the 11.7-trillion-yen ($107 billion) package, the boost to government spending is expected to be about 2.0 trillion yen. The government will also consider income tax cuts.
The announcement came hours after official figures showed that Japan's core inflation rate surged to an annualised pace of 2.4% in July from 1.9% the previous month on the back of soaring energy and material costs.
Japan was stuck in a deflationary spiral for years, but the return of inflation has sparked concern as it is being driven entirely by rising import costs rather than a stronger domestic economy.
The fear is that rising prices will dampen already tepid consumer spending, which dropped 0.5% in July from a year earlier, down for a fifth straight month.
