REPEAT: MNI: BOJ Caution Intact As Nov Tokyo CPI Rise Unch

Repeats Story Initially Transmitted at 00:45 GMT Nov 30/19:45 EST Nov 29

By Hiroshi Inoue

     TOKYO (MNI) - Tokyo's core inflation rose an annual 1.0% in November,

rising at the same rate as in October, underlining that inflation remains

weighed by the structural factors outlined by the Bank of Japan back in July.

     Following the release, BOJ officials maintain the view that the pace of

inflation remains sluggish and they remain vigilant over the outlook for prices,

as firms are still cautious about raising retail prices amid lackluster private

consumption.

     In central Tokyo, core CPI rose 1.0% on year in November for the 17th

straight year-on-year rise, with the pace of increase unchanged from the 1.0%

seen in both October and September.

     With Tokyo data seen as a strong lead indicator for the national data, it

suggests the year-over-year rise in Japan's November core CPI will be unchanged

from the 1.0% rise in October.

     --CORE-CORE UNCHANGED

     The core-core CPI (excluding fresh food and energy) rose 0.6% on year in

November, also unchanged from a 0.6% gain in October.

     The BOJ still hold the view that as further price rises come to be more

widely observed, this will lead to a gradual rise in medium- to long-term

inflation expectations through the adaptive inflation expectation formation

mechanism.

     The policymakers will likely maintain the view, "Inflation expectations

have been more or less unchanged" at its two-day policy meeting on Dec. 19-20.

     --BRIGHT SPOT

     In one bright spot, BOJ officials are encouraged by the acceleration of

household durable goods prices in November, as they have been expecting a pick

up in those prices. Household durable goods rose 0.5% on year in November,

improving from -3.0% in October.

     Prices of goods excluding volatile fresh food rose 1.7% on year in

November, with the pace of increase accelerating from 1.6% in October,

indicating that firms are gradually passing higher costs onto consumers.

     Meanwhile, the service prices, which account for just over a half of the

CPI basket, rose 0.5% on year in November, slowing from October's 0.6%. Prices

for eating out rose 1.0% on year in November, up from 0.9% in October, showing

that an uptrend caused by high labor costs in the sector continues.

--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