Tokyo core consumer prices rise 0.8 percent in July; BOJ target elusive

By Leika Kihara

TOKYO (Reuters) – Tokyo’s core consumer prices rose 0.8 percent in July from a year earlier, accelerating for a second straight month but offering little comfort to the Bank of Japan as it struggles to reach its elusive 2 percent inflation target.

The figure for Tokyo, considered a leading indicator for nationwide price trends, heightens the chance the central bank will concede next week that inflation could fall short of its target for as long as three more years.

The increase in Tokyo’s core consumer price index (CPI), which includes oil products but excludes fresh food prices, was slightly higher than a median market forecast for a 0.7 percent gain. It followed a 0.7 percent gain in June.

The core-core price index, which excludes both energy and fresh food costs, was up 0.5 percent in July, accelerating from a 0.4 percent increase in June, the data showed.

Tokyo CPI data is available a month before nationwide figures.

Sources have told Reuters that the BOJ, facing stubbornly low inflation, is in unusually active discussions on ways to make its policy framework more sustainable on the view it will take more time than expected to meet its price goal.

Data out last week showed nationwide core consumer prices rose 0.8 percent in June from a year earlier, accelerating slightly from the previous month but was due largely to higher energy costs.

An index stripping away energy and fresh food costs showed nationwide inflation slowed for the third straight month in June, a setback for the BOJ’s efforts to meet its inflation target via aggressive monetary easing.

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