Parliament will be dissolved on November 21st, less than two years into four-year term, the prime mister said during the press conference in Tokyo. New elections will likely be held on December 15th. The consumption tax raise would be postponed to April 2017 from October 2015.
The decision comes after preliminary data on third-quarter gross domestic product released this week showed that the tax increase which took effect in April depressed consumer spending more than expected and pushed Japan into a technical recession.
Abe’s policies, supported by the Bank of Japan led to a plunge in the yen. The sharp depreciation of the currency fueled exports and a surge in corporate earnings, yet did not help much general public. While prices went up due to higher taxes and surge in cost of imports, wages did not rise.