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Japan inflation inches up in June ahead of BOJ report

Japan inflation inches up in June ahead of BOJ report

Mubasher: Japan’s inflation gained momentum last June for the first time since four months, official data said on Friday, but still far from the Bank of Japan’s (BOJ) 2% target.

Core consumer price index (CPI), which excludes volatile fresh food rose 0.8% year-on-year in the sixth month of 2018, for the 18th month in a row the Statistics Bureau of Ministry of Internal Affairs and Communications said.

This came higher than a 0.7% gain in May, and in line with the figure expected by analysts polled by the Nikkei.

The gain was largely attributed to higher energy prices, which signals that the world’s third largest economy’s inflation may still lack pace.

Excluding the impact of energy and fresh food prices, the so-called core-core CPI, ticked up 0.2% in June, compared with the same month last year, but lower than the previous month’s increase of 0.3%.

Following the increase in the third quarter of 2018, “we expect inflation to weaken toward year-end as oil price and foreign exchange effects fade," Barclays analyst Tetsufumi Yamakawa told MarketWatch, predicting the core-core inflation to hover around 0.5% during the quarter.

Moreover, the BOJ is set to lower their inflation expectations in its quarterly report slated for 31 July, due to the recent ease in price movements.

In the meantime, the central bank expects the core CPI to rise 1.8% in the year to March 2021, stripping out the scheduled sales tax increase in October 2019.