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MNI BRIEF: Japan's Feb Tokyo CPI Rises 3.3% Vs. 4.3% in Jan

(MNI) Tokyo

The year-on-year rise in Tokyo core inflation rate slowed as expected to 3.3% in February from January's 4.3%, indicating that the nationwide core CPI will continue to decelerate due to government gas and electricity subsidies that run to October, data from the Ministry of Internal Affairs and Communications showed on Friday.

But some Bank of Japan officials see the possibility that Japan’s core CPI may not weaken as much as widely expected in the wake of stronger-than-expected pass-through of cost increases. They are also focused on wage hikes.

The core-core CPI (excluding fresh food and energy) - a key indicator of the underlying trend of inflation - rose 3.2% y/y in February, accelerating from 3.0% in January.

The Tokyo core CPI remained above the Bank of Japan's 2% target for ninth straight month in January, a sign that rising raw material costs were steadily pushing up a broad range of prices for daily necessities.

The February index was hit lower prices for energy (up 5.3% vs. 26.0%) but boosted by foods excluding perishable foods (up 7.8% vs. 7.4%). Tokyo saw proceed food prices, which BOJ officials are focused on and are sensitive to economic activity, rose 8.2% y/y in February after rising 7.6% in January.

Prices for eating and drinking services, which BOJ officials also watch, rose 8.0% y/y in February from +7.4% in January.

MNI Tokyo Bureau | +81 90-2175-0040 |
MNI Tokyo Bureau | +81 90-2175-0040 |

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