Core inflation in Tokyo stays below BOJ's target in March

TOKYO, March 31 : Core consumer prices in Tokyo rose 1.7 per cent in March from a year earlier, data showed on Tuesday, staying below the central bank's 2 per cent target for a second straight month as the effect of fuel subsidies offset rising costs from a weak yen.

Analysts expect the slowdown to be temporary as surging oil prices from the Middle East conflict, as well as higher import costs from the weak yen, heighten inflationary pressure on the economy.

The increase in the Tokyo core consumer price index (CPI), which excludes volatile costs of fresh food, followed a 1.8 per cent rise in February. It compared with a median market forecast for a 1.8 per cent gain.

An index stripping away the effect of fresh food and fuel, which is closely watched by the Bank of Japan as a better gauge of trend inflation, rose 2.3 per cent in March after a 2.5 per cent gain in February, the data showed.

The BOJ raised interest rates to a 30-year high of 0.75 per cent in December, taking another landmark step in ending decades of huge monetary support in a sign of its conviction that Japan is progressing towards durably hitting its 2 per cent inflation target.