Japan inflation remains above BC’s target and rises 2.4% in July

Japan’s core consumer inflation accelerated in July to its strongest level in seven-and-a-half years, boosted by fuel and raw material prices and worsening the cost of living for households, which have yet to see significant wage gains.

In a sign of increasing price pressure, the so-called “core core”, which eliminates not only the impact of fresh food volatility but also energy prices, also rose in July at the fastest annual pace in more than six years. .

The core consumer price index, which excludes fresh food prices, rose 2.4% in July from a year earlier, in line with market expectations, government data showed on Friday.

In June, the index had advanced 2.2%, and the July reading marked the fastest pace since December 2014, excluding the effects of the sales tax hike.

The “core core” rose 1.2% in July from a year ago, the strongest rate since December 2015.

While inflation has surpassed its 2% target for four consecutive months, the Bank of Japan will likely remain an exception and is likely to keep monetary conditions ultra-loose with price increases still modest compared to other major economies.

“Food prices and a weak yen were the main drivers of accelerating inflation,” said Yoshimasa Maruyama, chief market economist at SMBC Nikko Securities, adding that he expected core consumer inflation to reach 3% this year.