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Repeats Story Initially Transmitted at 05:34 GMT Sep 28/01:34 EST Sep 28
     TOKYO (MNI) - The pace of the annual inflation rate in Tokyo, a leading
indicator of the national average, accelerated in September from August,
supporting the Bank of Japan view of a gradual rise in consumer prices amid a
modest but sustained economic recovery.
     However, BOJ officials remain cautious about the price outlook as prices
have been slow to respond to an economic recovery and tightening labor market
conditions.
     The BOJ will maintain the view "inflation expectations have been more or
less flat" at its key policy meeting scheduled on Oct 30-31.
     In central Tokyo, the core consumer price index excluding fresh food rose
1.0% on year in September for the 15th straight year-on-year rise, with the pace
of increase accelerating from +0.9% in August, government data released Friday
showed.
     The core-core CPI (excluding fresh food and energy) -- a key indicator of
the underlying trend of inflation -- rose 0.7% on year in September, also up
from +0.6% in August.
     The CPI in the capital is a leading indicator of the national CPI for
September due out on Oct. 19. It indicates that the core CPI in September will
rise from +0.9% on year in August.
     The BOJ's cautious view on price outlook is also based on the latest data
that the 10% trimmed mean of the total CPI rose 0.5% on year in August,
unchanged from +0.5% in July and still below the recent peak of +0.8% seen at
the start of the year.
     Figures are the weighted averages of the year-on-year price changes in
individual items making up the CPI. Items are arranged in ascending order of
their year-on-year rate of price change and those falling into the upper and
lower 10% tails by weight are trimmed.
     The diffusion index, showing the share of increasing items minus the share
of decreasing items, fell to 11.1 in August from 14.7 in July and 17.0 in June.
--MNI Tokyo Bureau; tel: +81 90-4670-5309; email: max.sato@marketnews.com