Facing a sudden slide in public support, Japanese Prime Minister Sanae Takaichi is pushing forward with a high-stakes economic gamble by temporarily slashing the food consumption tax. Her Cabinet approved the plan on August 5, 2026, to cut the tax from 8% to 1% for two years starting in April 2027, targeting groceries, non-alcoholic beverages, and takeaway meals. Takaichi frames this as essential relief for low- and middle-income households struggling with inflation and as a core promise from the Liberal Democratic Party's landslide election victory in February. However, the cut could worsen inflation by driving up demand, while a growing fiscal deficit from a revenue shortfall of up to 10 trillion yen could trigger negative market reactions, weakening the yen and increasing costs of imported food and energy.