August 18, 2017 / 6:58 AM / in a year

Japan's consumer prices seen rising for seventh straight month in July

TOKYO (Reuters) - Japan’s core consumer prices were expected to show their seventh straight month of annual increases in July, a Reuters poll found, offering the central bank some hope a strengthening economic recovery will gradually lift inflation toward its 2 percent target.

File Photo - A woman with a baby buggy looks at items outside a discount store at a shopping district in Tokyo, Japan, February 25, 2016. REUTERS/Yuya Shino

But the projected 0.5 percent year-on-year increase will be well off the Bank of Japan’s target and keep the central bank under pressure to maintain its massive monetary stimulus, analysts say.

“The increase is largely due to the effect of rising energy costs. Upward price pressure for other goods remains weak,” said Takumi Tsunoda, senior economist at Shinkin Central Bank.

The nationwide core consumer price index (CPI), which includes oil products but excludes volatile fresh food prices, rose 0.4 percent in June from a year earlier.

Core consumer prices in Tokyo, available a month before the nationwide data, were seen likely to rise 0.3 percent in August from a year earlier after a 0.2 percent gain in July, according to economists polled by Reuters.

The government will announce the consumer inflation data at 8:30 Tokyo time on Aug. 25 (2350 GMT Aug. 24).

More than four years of massive monetary stimulus has failed to accelerate inflation to the BOJ’s 2 percent target, underscoring the difficulty of eradicating the deflation that has plagued the country for two decades.

The CPI data will follow news this week that Japan’s economy expanded at the fastest pace in more than two years in the second quarter as consumer and company spending picked up, heralding a long-awaited bounce in domestic demand.

Nonetheless, wage growth and inflation remain subdued as companies remain wary of passing more of their profits to employees.

Reporting by Leika Kihara; Editing by Eric Meijer

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