MNI DATA BRIEF: Japan July Core CPI Drop Narrows From June

Japan's July annual core consumer inflation rate fell 0.2% y/y, for the 12th straight drop, following -0.5% in June on lower mobile phone charges, data from the Ministry of International Affairs and Communication released on Friday showed.

The underlying inflation rate measured by the core-core CPI (excluding fresh food and energy) fell 0.6% y/y in July, improving from -0.9% in June.

Bank of Japan officials will likely maintain the view that the underlying trend excluding special factors remains solid, judging from prices for services and eating and drinking services. Japan has this month extended and expanded a state of emergency to curb the spread of Covid-19.

Service prices fell 2.2% in July, improving from -2.5%, and prices for eating and drinking services rose 0.4% in July following +0.3% in June, showing the impact of corporate price cuts to stimulate demand. Energy items rose again in July, up 0.41 pp, widening from +0.31 pp in June.