Japan's government will urgently and flexibly take steps to ease the pain of the surging cost of living to ensure the economy's recovery from COVID-induced doldrums, Finance Minister Shunichi Suzuki said on Wednesday.

Suzuki made the remark just before parliament began debate on a supplementary budget worth 2.7 trillion yen ($21 billion) to help households and small firms cope with high energy and food prices.

The extra budget will be funded by bond sales, which could further strain a public debt that is already more than twice as large as annual economic output.

Suzuki vowed to ensure economic recovery from the pandemic by encouraging Japanese firms to smoothly pass on rising costs and by raising wages to generate a virtuous cycle of growth.

"Uncertainty about the outlook is rising, mainly because Russia's invasion of Ukraine has destabilised crude oil and commodity prices," Suzuki told the lower house of parliament.

"That could hamper the pace of economic recovery from the coronavirus."

Of the 2.7 trillion yen in the supplementary budget, the government plans to spend 1.17 trillion yen on mitigating the effect of rising global oil prices. This will include subsidising gasoline wholesalers.

The supplementary budget also includes 1.52 trillion yen for budget reserves that the government will be able to spend later as necessary.

($1 = 127.0200 yen)

(Reporting by Tetsushi Kajimoto; Editing by Bradley Perrett)