REPEAT: MNI 5 THINGS: Japan May Core CPI Up on Gasoline, Beer

--Japan May Core CPI +0.7% Y/Y; MNI Median +0.7%; Apr +0.7% 

--Japan May Core-Core CPI +0.3% Y/Y; Apr +0.4% 

--Japan May CPI Energy Costs +5.6% Y/Y; Apr +5.3% 

--Japan May CPI Food Ex-Perishables +1.1% Y/Y; Apr +1.1% 

--Japan May CPI Household Durable Goods -3.5% Y/Y; Apr -3.8% 

--Japan May CPI Electronics Goods -3.8% Y/Y; Apr -5.0% 

--Japan May CPI Accommodations -1.8% Y/Y; Apr -2.3% 

--Japan May CPI Overseas Holiday Tours +5.6% Y/Y; Apr +9.8%

     TOKYO (MNI) - The recent slide in the pace of Japanese consumer inflation

stopped in May as higher energy and beer prices offset the base-year effect of

mobile communications fee discounts that took effect in August last year, data

from the Ministry of Internal Affairs and Communication released Friday showed.

     The national average core consumer price index (excluding fresh food) rose

0.7% on year in May for the 17ths straight year-on-year rise after the pace of

increase decelerated to +0.7% in April from +0.9% in March and +1.0% in

February, when temporary factors pushed up the prices for hotels and overseas

holiday tours.

     However, the slow pace of wage and retail price hikes indicates that the

Bank of Japan is unlikely to achieve its 2% inflation target in the next few

years.

     The key points from the latest CPI data:

     -- The year-on-year rise in the core CPI (excluding fresh food) at +0.7% in

May was led by gasoline prices as well as the effect of recent markups for beers

served at restaurants and bars, following retail price hikes last year.

     -- The CPI was weighed down by lower mobile communications charges due to

the base-year effect that will continue through July. Last August, some carriers

changed the fee structures, giving discounts to low data volume users. The

prices for overseas holiday tours also slowed.

     -- The underlying inflation rate measured by the core-core CPI (excluding

fresh food and energy) rose 0.3% on year in May, slowing from +0.4% in April. It

was the 11th consecutive year-on-year rise.

     -- The prices for services ranging from rents and restaurants to medicine

and communications rose 0.2% on year in May, down from +0.3% in April, as lower

mobile communications fees offset higher medical costs. The pace of y/y increase

remains slow as some companies are resisting price hikes amid tough competition

by investing in technology and curtailing business hours to cut costs.

     -- Goods prices excluding volatile fresh food prices rose 1.2% on year in

May, little changed from +1.3% in April. The pace of increase in overall goods

prices was also little changed at +1.1% in May after +1.0% in April. Fresh

vegetable prices have stabilized after a surge late last year. The prices for

processed food (canned food, bread, snacks, beverages, etc.), which accounts for

about 15% of the total CPI, rose 1.0% on year in May after +0.9% in April.

     -- The total CPI rose 0.7% on year in May, with the pace of increase

accelerating slightly from the 0.6% rise in April due to higher fresh fish

prices.

--MNI Tokyo Bureau; tel: +81 90-4670-5309; email: max.sato@marketnews.com