MNI POLICY: Japan Nov CPI Decelerates; Increases BOJ Caution

--Japan CPI Up 0.9% y/y In November Vs. +1.0% in October

     TOKYO (MNI) - Japan's nationwide core consumer price index rose 0.9% on

year in November, decelerating from +1.0% in October, leaving Bank of Japan

officials still cautious over their inflation outlook.

     The inflation rate remains stubbornly slow in responding to a sustainable

economic expansion and tight labor market conditions, with firms still cautious

about raising retail prices.

     BOJ officials no longer expect the pace of Japan's consumer price rise to

accelerate sharply, as structural factors of impeding price rises will not

disappear anytime soon.

     But those officials were discouraged by the deceleration in the nationwide

core CPI in November as the November Tokyo core CPI, a leading indicator, rose

1.0% on year, indicating the nationwide core CPI would have also risen 1.0% in

November.

     Prices for goods rose 1.4% on year in November, slowing from +2.6% in

October. Prices excluding fresh food rose 1.6% in November, also slowing from

+1.9% in October.

     On the bright side, prices for eating out rose 1.1% on year in November,

accelerating from 1.0% in October, showing upward pressure on prices from labor

shortages and high costs continued.

     The national average core CPI (excluding fresh food) rose 0.9% on year in

November, recording the 23rd straight year-on-year rise, following a 1.0% gain

in October.

--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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