MNI POLICY: BOJ Cautious Despite April Tokyo CPI Acceleration

--Tokyo April Core CPI Rises 1.3% Y/Y Vs +1.1% in February

     TOKYO (MNI) - Central Tokyo's core consumer price index accelerated in

April, but the Bank of Japan remains cautious of the overall outlook on prices.

     BOJ officials are focused on how the recent retail price hikes by companies

have been pushed up the April Tokyo CPI and whether upcoming annual corporate

price revisions will have a further impact.

     Tokyo core CPI rose 1.3% on year in April, accelerating from +1.1% in

March, with the gain still largely due to the higher positive contribution from

crude prices (+0.38 percentage points in March vs +0.45 pts in March).

     There were a few bright spots for BOJ economists to focus on in the data.

Prices for household durable goods rose 12.9% on year in April, accelerating

further from a 10.2% gain in March.

     Alongside that, foods prices excluding perishable foods rose 1.1% on year,

accelerating from 0.9% in March. The positive contribution rose to 0.24

percentage point in March from 0.18pp.

     --CORE-CORE HIGHER

     The core-core CPI (excluding fresh food and energy) -- a key indicator of

the underlying trend of inflation -- rose 0.9% on year in April, up from +0.7%

in March.

     The BOJ Thursday tweaked its forward guidance for policy rates as it is

likely to take longer than hoped to achieve the 2% price target, with the

outlook for economic activity and prices including developments in overseas

economies still unclear.

     Tokyo CPI is a leading indicator of the national CPI, with the April

reading due out on May 24, with core CPI in April seen 0.8% or higher on year.

--MNI Tokyo Bureau; tel: +81 90-2175-0040; email: hiroshi.inoue@marketnews.com

--MNI London Bureau; tel: +44 203-586-2225; email: les.commons@marketnews.com

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