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MNI POLICY: Japan May CPI Rise Slows; BOJ Sees Gradual Rise
By Hiroshi Inoue
TOKYO (MNI) - The Bank of Japan still sees inflation rising towards its 2%
target despite the deceleration in May, although no swift pick-up in pace is
seen in coming months.
Nationwide core consumer prices slowed in May, in line with BOJ
expectations after data earlier this month showed slowing Tokyo core CPI. The
underlying trend remains solid but MNI understands Bank officials are perplexed
by the slow speed of price rises despite the continued positive output gap and
are increasingly cautious over the outlook.
--SLOWER MAY CPI
Core prices rose 0.8% for a 29th straight rise in May, slowing from April's
0.9%. Tokyo core CPI rose 1.1% on year in May, after rising 1.3% last month.
Many restaurants and processed food companies have raised retail prices,
but the BOJ sees the impact on official CPI data as limited.
Goods prices excluding volatile fresh food prices rose 1.2% on year in May,
after April's 1.4% gain, although the overall contribution to CPI rose to 0.22pp
from 0.20pp in April. Overall goods prices rose 1.1% in May, slowing from 1.2%
previously.
Prices for processed food, which accounts for 15% of the total CPI that BOJ
officials focus on, rose 0.9% on year in May, up from 0.8% in April, perhaps one
indication that corporate price hikes may be gaining a little traction.
One note of caution came from service prices, which rose 0.2% on year in
May, decelerating from 0.4% in April, although prices for eating out rose 1.1%
on year in May, unchanged from both April and March, suggesting upward pressure
on eating out continued but without gaining momentum.
The BOJ will get their next look at the inflation picture on June 28 when
this month's Tokyo core CPI data is published.
--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
[TOPICS: MMJBJI,MMJBJ$,M$A$$$,M$J$$$,MT$$$$,MX$$$$]
To read the full story
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Why MNI
MNI is the leading provider
of intelligence and analysis on the Global Fixed Income, Foreign Exchange and Energy markets. We use an innovative combination of real-time analysis, deep fundamental research and journalism to provide unique and actionable insights for traders and investors. Our "All signal, no noise" approach drives an intelligence service that is succinct and timely, which is highly regarded by our time constrained client base.Our Head Office is in London with offices in Chicago, Washington and Beijing, as well as an on the ground presence in other major financial centres across the world.