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REPEAT: MNI POLICY: Japan CPI Rise Flat, BOJ Remains Cautious

Repeats Story Initially Transmitted at 05:34 GMT Aug 24/01:34 EST Aug 24
     TOKYO (MNI) - The year-on-year rise in Japan's core consumer price index
was unchanged in July from June, leaving Bank of Japan officials cautious about
their inflation outlook.
     The national average core CPI (excluding fresh food) rose 0.8% on year in
July for the 19th straight year-on-year rise. The pace was unchanged from +0.8%
in June as the positive contribution from processed food prices (+0.02
percentage points) was offset by the negative contribution from overseas holiday
tours (-0.03% points).
     Energy prices continued to support the recent gradual pickup in inflation
while the base-year effect of discounts on mobile communications costs remained.
     BOJ officials expected the core CPI y/y increase to have accelerated in
July as the core CPI in central Tokyo, a leading indicator of the national CPI,
rose 0.8% in July, up from +0.7% in June.
     The next key data is the Tokyo CPI for August due out on Aug. 31.
     In the July national CPI data, BOJ officials were encouraged by higher
goods prices.
     Goods prices excluding volatile fresh food prices rose 1.5% on year in
July, with the pace of increase faster than +1.4% in June. The pace of increase
in overall goods prices accelerated to +1.7% in July from +1.1% in June in the
wake of major rain storms that damaged crops.
     The prices for processed food (canned food, bread, snacks, beverages,
etc.), which accounts for 15% of the total CPI, rose 1.3% on year in July after
+1.1% in June, reflecting higher energy and labor costs.
--MNI Tokyo Bureau; tel: +81 90-4670-5309; email: max.sato@marketnews.com

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