Japanese Prime Minister Fumio Kishida said Wednesday he will not seek re-election as head of his party, meaning the end of his premiership after just under three years.

The ruling Liberal Democratic Party, which has governed Japan almost uninterrupted since 1945, is due to hold an internal leadership contest next month. Its popularity ratings have slumped because of rising prices.

"In this presidential election, it is necessary to show the people that the LDP is changing and the party is a new LDP," Kishida told reporters in Tokyo.

"For this, transparent and open elections and free and vigorous debate are important. The most obvious first step to show that the LDP will change is for me to step aside," he said.

"I will not be running in the forthcoming presidential election."

Kishida had informed senior administration officials of his intention not to run, media including national broadcaster NHK and Kyodo news reported earlier,

The head of the ruling party is traditionally also prime minister.

Kishida, 67, has been in office since October 2021, and has seen his and his party's poll ratings slide sharply in response to rising prices hitting Japanese incomes.

His cabinet's support rating has been languishing around 25 percent this year, according to an NHK poll.

The world's fourth-largest economy has also struggled to gain traction, with output shrinking 0.7 percent in the first quarter.

In November, Kishida announced a stimulus package worth 17 trillion yen (more than $100 billion at the time) as he tried to ease the pressure from inflation and rescue his premiership.

Having seen prices barely move for years, Japanese voters have been reeling from rising prices since Russia invaded Ukraine in 2022, pushing up energy costs and putting pressure on the government.

Despite some recovery in recent weeks, the yen has been one of the world's worst-performing currencies over the past year, falling sharply against the dollar.

While welcome news to Japanese exporters, this makes imports pricier and stokes inflation for households.

Even before November, the government had injected hundreds of billions of dollars into the economy over the past three years since the Covid-19 pandemic.

Early exit

Kishida could in theory have governed until 2025, and there had been speculation he might call a snap election to shore up his position.

But NHK reported that growing voices inside the LDP believed the party would not be able to successfully contest elections under the Kishida government.

Kishida has also faced severe criticism over a major funding scandal within the party.

The prime minister "seems to have judged that he himself needs to take responsibility in order to dispel growing distrust", NHK said.

Under Kishida, Japan pledged to double its defence spending to the NATO standard of two percent of GDP by 2027.

This marked a turn from decades of strict pacifism, encouraged by the United States as both seek to confront an increasingly assertive China.

US President Joe Biden hosted Kishida at the White House in April when the two countries announced a "new era" in cooperation.

Japan and the Philippines in July signed a defence pact allowing for the deployment of troops on each other's territory.