Japan Political Instability Inflation 2025: Shattering the Stability Myth

The fortress of stability has fallen. Japan's once-unshakable political landscape is succumbing to a populist wave it spent decades avoiding. 2025 marks the year when the 'myth of stability' in Japanese politics finally hit its breaking point. It's not just a typical political shift; it's a structural collapse of the economic and psychological barriers that held Japanese society together.

Why Japan Political Instability Inflation 2025 Matters

For years, Japan was the exception to the global rule of populist surges. While Western democracies struggled with elite failure and anti-immigration backlashes, the Liberal Democratic Party (LDP) maintained a steady hand. Even the COVID-19 pandemic didn't stop the ruling party from winning comfortable majorities in 2021 and 2022. The secret sauce was a tolerable deflationary environment—wages were flat, but living costs were manageable.

Everything changed when inflation entered the chat. Driven by the Russo-Ukraine war and supply chain chaos, rising prices forced the Japanese public to confront a reality they weren't prepared for. Suddenly, populist parties promising to protect household incomes, like the Democratic Party for the People (DPFP) and the left-leaning Reiwa Shinsengumi, began gaining massive traction among frustrated voters.

Sanseito and the New Right-Wing Wave

The turning point was the Upper House election in July 2025. The LDP lost control of both houses, signaling a historic defeat. The real shocker was Sanseito, a Western-style right-wing populist party that emerged as the third-largest force in the proportional vote. By weaponizing anxieties over the growing foreign population and economic grievances, they successfully carved out a new conservative electorate.

Even Prime Minister Takaichi Sanae's rise can be seen as a byproduct of this pressure. She wasn't the establishment's first choice, but her strong grassroots support—driven by voters who didn't want to lose the party to more radical elements—propelled her to the premiership. Kamiya Sohei, leader of Sanseito, has openly claimed that Takaichi's victory proves his party is now a force that the LDP must reckon with.