Japan's July core inflation hovers at 2-yr low, adds pressure on BOJ
* July core CPI +0.6% yr/yr, matches forecast
* July core-core CPI +0.6%, slightly faster than June
* Soft inflation pressures BOJ to ease further
(Adds details, economist comment)
By Daniel Leussink
TOKYO, Aug 23 (Reuters) - Japan's core consumer inflation
wallowed at a two-year low in July, increasing pressure for the
central bank to acknowledge price momentum was slowing and
expand its radical stimulus programme.
With the global economy hit by the Sino-U.S. tariff war and
a pick-up in demand in the second half of the year uncertain,
attention has turned to global central banks to gauge their
readiness for further stimulus.
Indeed, expectations that the BOJ will ease further have
grown, a recent Reuters poll showed, after the central bank at
its last policy meeting committed to expanding stimulus if a
global slowdown prolongs and threatens to derail Japan's
The core consumer price index, which includes oil products
but excludes fresh food prices, rose 0.6% in July year-on-year,
matching economists' median estimate.
The reading for July matched the previous month's gain,
which was the slowest pace since July 2017 when the index
The so-called core-core CPI, which excludes the effects of
volatile food and energy costs, was also up 0.6% in July from a
year earlier. It is closely watched by the BOJ to gauge how much
the economy's strength has translated into price gains.
But the data indicates the central bank remains well behind
in its efforts to achieve its 2% inflation target as an
eight-month long export slump on the back of the U.S.-China
trade war and slowing global demand take a toll on the world's
"It's just a matter of time before the BOJ acknowledges that
the momentum of a higher inflation rate is being lost," said
Masaaki Kanno, chief economist at Sony Financial Holdings.
"Japan is not in deflation at all, but it (inflation) is far
below the BOJ's target," adding that the central bank may do so
in the December quarter.
Product classes in which prices rose include processed food,
electricity and furniture, while those that fell include fresh
food and gasoline.
Japan's economy grew an annualised 1.8% in the second
quarter thanks to robust household consumption and business
investment. But despite signs of strength at home, analysts have
warned the timing of a pick-up in global demand is crucial for
the growth outlook.
In July, exports slipped for an eighth month, marking the
longest run of declines in exports since a 14-month stretch from
October 2015 to November 2016.
Separately, Japanese manufacturers' confidence turned
negative for the first time since April 2013, the Reuters Tankan
Last month, the U.S. Federal Reserve cut interest rates for
the first time since the financial crisis, although minutes of
the meeting showed policymakers were deeply divided over whether
(Reporting by Daniel Leussink; Editing by Sam Holmes)
First Published: 2019-08-23 01:57:41
Updated 2019-08-23 03:51:36
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