Japan’s core inflation accelerates to 2.7% in July, matches forecast
JAPAN’S core inflation accelerated for a third straight month in July, data showed on Friday, keeping the central bank on track to consider further interest rate hikes in coming months.
The nationwide core consumer price index (CPI), which excludes fresh food items, rose 2.7 per cent from a year earlier after rising 2.6 per cent in June. It matched the median market forecast.
The “core core” index, which excludes fresh food and energy costs and is closely watched by the Bank of Japan (BOJ) as a key gauge of broader inflation trends, rose 1.9 per cent after increasing 2.2 per cent in June.
The increase in the core CPI, which largely reflected a phase-out of government subsidies to curb household utility bills, put the inflation rate at or above the central bank’s 2 per cent target for the 28th straight month.
Inflation data is seen as key to further decisions on rate hikes by the BOJ, which surprised markets in July by raising interest rates to a 15-year high and signalling its readiness to hike borrowing costs further on growing prospects that inflation will durably hit its 2 per cent target.
The BOJ’s hawkish tone led the battered yen to soar and Tokyo stocks to plunge in their biggest single-day rout since 1987’s Black Monday sell-off.
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Although markets have since stabilised, BOJ Governor Kazuo Ueda has been asked to discuss the July rate decision at parliament on Friday.
Data released last week showed Japan’s economy rebounded much faster than expected in the second quarter on robust consumption, backing the case for the central bank to continue its monetary policy tightening campaign.
In a Reuters poll this month, 57 per cent of economists predicted the BOJ would raise borrowing costs again by the end of the year. REUTERS
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