Japan's core inflation slows in July but stays above BOJ target

Japan's core inflation slowed for a second straight month in July but stayed above the central bank's 2 per cent target, keeping alive market expectations for another interest rate hike in the coming months.

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TOKYO -

The nationwide core consumer price index (CPI), which excludes fresh food items, rose 3.1 per cent in July from a year earlier, government data showed on Aug 22, faster than a median market forecast for a 3 per cent gain.

The rise was smaller than the 3.3 per cent increase in June, due largely to the base effect of the increase in energy prices in 2024, which came from the termination of government subsidies to curb fuel bills.

"Inflation is clearly slowing from May, when it hit 3.7 per cent, and is expected to continue easing for the rest of the year due to a moderation in rice price surges and the resumption of energy subsidies," said Mr Kazutaka Maeda, economist at Meiji Yasuda Research Institute.