The government announced a relief package Tuesday for small firms and low-income households to help them cope with high oil prices.
The package eases loan-repayment conditions for small and midsize companies, subsidizes heating oil for low-income households in cold-weather areas and discounts nighttime expressway tolls for transportation firms.
Economic and Fiscal Policy Minister Hiroko Ota said the package was adopted by the Cabinet and the ministers will meet again this month to hammer out the specifics, including how much money to allocate for each measure.
The relief package, reportedly worth about ¥50 billion to ¥60 billion, is expected to be funded by a supplementary budget this fiscal year.
"People are worried (about rising oil prices) with the arrival of winter," Prime Minister Yasuo Fukuda told the Cabinet. "I want you all to work hard on the plan."
Ota said the government must minimize the impact of rising materials costs on the economy.
"It is not only oil prices, but grain prices that are going up. We must see how such rising costs will affect the prices of daily necessities, such as petroleum products and dietary items," she said.
The government already provides special grants to subsidize kerosene expenses in Hokkaido, but the new plan will be expanded to help other cold-weather areas.
The package follows a request by Fukuda last week for his Cabinet to draw up proposals to help struggling small and midsize companies, which employ about two-thirds of Japan's workers.
Small and midsize companies are having a hard time passing on the rising cost of materials to large corporate customers, economists said.
According to a Finance Ministry report last week, pretax profits at medium-size companies in the July-September quarter fell 16.9 percent from the same period a year ago, compared with a 1.3 percent rise at large companies.