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Inflation in Japan's capital stays elevated as price pressures broaden

Inflation in Japan's capital stays elevated as price pressures broaden

FILE PHOTO: A man walks past on a nearly empty street in a snow fall during the first weekend after Tokyo Governor Yuriko Koike urged Tokyo residents to stay indoors in a bid to keep the coronavirus disease (COVID-19) from spreading, at Ameyoko shopping and amusement district in Tokyo, Japan March 29, 2020. REUTERS/Issei Kato

TOKYO : Core consumer prices in Tokyo, considered a leading indicator of Japanese price trends, rose 1.9 per cent in May from a year earlier, a pace that matched the previous month's seven-year peak in a sign recent fuel-driven inflationary pressures were broadening.

The increase in inflation, still driven mostly by rising raw material costs, suggests Japan will see price growth hover around the central bank's 2 per cent target for much of this year.

The rise in the Tokyo core consumer price index (CPI), which excludes volatile fresh food but includes energy costs, was roughly in line with a median market forecast for a 2.0 per cent gain.

The so-called core core CPI, which excludes volatile fresh food and energy cost, rose 0.9 per cent in May from a year earlier, government data showed on Friday.

Japan's nationwide core consumer inflation in April exceeded the central bank's 2 per cent target for the first time in seven years due largely to the boost from rising fuel and food import costs.

Bank of Japan Governor Haruhiko Kuroda has repeatedly said such cost-push inflation would be temporary and won't lead to the kind of sustained price growth that justifies withdrawing stimulus.

In fresh quarterly forecasts produced last month, the BOJ projects core consumer inflation to hit 1.9 per cent in the current fiscal year before moderating to 1.1 per cent in the 2023 and 2024 fiscal years.

Source: Reuters

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