Japan to Unveil Record-High Budget Amid Soaring Inflation and Property Prices

The Japanese government is set to approve its largest-ever national budget for the upcoming fiscal year, a move that highlights the complex challenges facing the world's fourth-largest economy. Finance Minister Shigeyuki Katayama confirmed on December 22 that the budget for fiscal year 2026 will be a record high, coming at a time when the nation is grappling with persistent inflation and a red-hot property market in its capital.

Inflationary Pressures and a Booming Asset Market

The government's expansionary fiscal policy coincides with growing economic headwinds for consumers. On December 23, reports indicated that a suspension of pork imports from Spain is fueling concerns about future price hikes, putting further pressure on household budgets already strained by inflation.

In stark contrast, the asset market is overheating. According to data released on December 22, the average price for a new condominium in Tokyo's 23 wards hit a staggering ¥124.2 million (approx. $840,000) in November 2025. This record figure points to a deepening disconnect between the real economy and soaring asset valuations.

Social Strains and a Shifting Labor Landscape

These economic pressures are mirrored by growing social tensions. A recent report revealed that over 7,000 teachers are on leave due to mental illness, with harassment from parents cited as a significant contributing factor. At the same time, the labor market is undergoing a structural shift. Companies are beginning to abolish the traditional 'entry sheet' for job applications, as the widespread use of AI has made candidates' submissions nearly indistinguishable from one another.