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     TOKYO (MNI) - The pace of the annual inflation rate in Tokyo, a leading
indicator of the national average, accelerated slightly in July from the
previous month, but the gradual pickup is keeping Bank of Japan officials to
remain cautious about the price outlook.
     At its two-day policy meeting ending on July 31, the BOJ is expected to
keep its view that the momentum toward achieving the 2% inflation target is
"maintained" as upward pressure on prices stemming from the improving output gap
remains intact.
     In central Tokyo, the core consumer price index excluding fresh food rose
0.8% on year in July for the 13th straight year-on-year rise, with the pace of
increase accelerating from +0.7% in June, government data released Friday
showed.
     The core CPI rise was due mainly to higher prices for processed food (+0.8%
in July vs. +0.6% in June) and rents (+0.3% in July vs. unchanged in June).
     The core-core CPI (excluding fresh food and energy) -- a key indicator of
the underlying trend of inflation -- rose 0.5% on year in July, also up from
+0.4% in June.
     The CPI in the capital is a leading indicator of the national CPI due out
on Aug. 24. It indicates that the core CPI in July will rise from +0.8% on year
in June.
--MNI Tokyo Bureau; tel: +81 90-4670-5309; email: max.sato@marketnews.com