By Kentaro Sugiyama and Kantaro Komiya
TOKYO (Reuters) - Japan's prime minister will order the government on Tuesday to put together a fresh relief package by the end of April to cushion the economic blow from rising fuel and food costs, fanned by the Ukraine crisis.
The order will likely intensify debate within the government and the ruling coalition over the scale of spending and source of funding, with some lawmakers calling for a package of around 10 trillion yen ($80.61 billion).
"We must respond flexibly to counter the impact on corporate activity and people's livelihood" from the Ukraine war-driven spike in raw material prices, Prime Minister Fumio Kishida told parliament on Monday, announcing his plan to make the order.
Kishida is under pressure, including from his party's ruling coalition partner Komeito, to compile an extra budget, instead of relying solely on reserves set aside to cope with pandemic-related spending.
"We haven't told the prime minister the extra budget must pass through the current parliament session, though that is what we have in mind," Komeito executive Keiichi Ishii told reporters after a meeting with Kishida.
Kishida offered few clues on whether an extra budget would be considered, saying that the priority was to tap money from COVID-19 reserves.
Komeito presented Kishida with a proposal on the package that called for expanding subsidies to industries hit by rising fuel costs, cutting the gasoline tax as well as steps to mitigate the impact of rising grain prices.
Rising fuel and raw material prices have dealt an additional blow to Japan's economy, which has lagged other countries in making a sustained recovery from the impact of the pandemic.
While a weak yen has historically benefited the export-reliant economy, the Japanese currency's plunge to six-year lows against the dollar is now seen as a risk to recovery by inflating rising import costs.
Political pressure for big fiscal spending is expected to heighten ahead of an upper house election in the summer, which Kishida must win to solidify his grip of power within his ruling Liberal Democratic Party.
($1 = 124.0500 yen)