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Japan's inflation stays above BOJ target for fourth straight month

July core consumer prices up 2.4% on year as price pressures broaden

Stripping away the effects of fresh food and energy, Japanese consumer prices rose 1.2% in July from a year ago, government data showed.   © Reuters

TOKYO (Reuters) -- Japan's core consumer inflation accelerated in July to its fastest in seven and a half years, driven by higher prices for fuel and raw materials and adding to the costs of living for households that have yet to see significant wage gains.

In a sign of broadening price pressure, the "core-core" index, which strips away not just the impact of volatile fresh food prices but also energy costs, also rose in July, by 1.2%, the fastest annual pace since December 2015.

The core consumer price index (CPI), which excludes fresh food prices, rose 2.4% in July from a year earlier, matching a median market forecast, government data showed on Friday.

That followed a 2.2% gain in June and marked the fourth straight month in which core consumer inflation breached the Bank of Japan's 2% target. It was also the fastest pace since December 2014, excluding the effects of sales tax hikes.

While the core index is still the BOJ's key price gauge, the central bank has recently placed more emphasis on the core-core index to gauge how much of the inflationary pressure is coming from domestic demand, rather than one-off factors like energy costs.

With inflation still modest compared with other major economies, the BOJ is likely to remain an outlier in keeping monetary conditions ultraloose.

BOJ Gov. Haruhiko Kuroda has stressed that the central bank will not see an exit from its massive stimulus program until consumer demand picks up.

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