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Japan's June core inflation near two-year low, adds pressure on BOJ

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Japan's June core inflation near two-year low, adds pressure on BOJ
FILE PHOTO: A shopper looks at items at a supermarket in Tokyo February 26, 2015. REUTERS/Yuya Shino   -   Copyright  Yuya Shino(Reuters)
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TOKYO (Reuters) – Japan’s core inflation slowed to its weakest in about two years in June, data showed on Friday, adding pressure on the Bank of Japan to deliver more stimulus to meet its 2% price target.

The core consumer price index, which includes oil products but excludes fresh food prices, rose 0.6% in June from a year earlier, matching with economists’ median estimate.

The June reading was the weakest since July 2017 when the index climbed 0.5% and compared with a 0.8% gain in May.

The so-called core-core CPI, which strips away the effects of volatile food and energy costs and is closely watched by the BOJ to gauge how much the economy’s strength has translated into price gains, was up 0.5% in June from a year earlier.

The data suggests the central bank is still a long way off from achieving its elusive 2% inflation target as the U.S.-China trade dispute and slowing global demand put pressure on the export-reliant economy.

BOJ officials have said they remain ready to expand stimulus if the economy deteriorates, joining the U.S. Federal Reserve in signalling an easing may be coming soon.

But BOJ Governor Haruhiko Kuroda on Wednesday kept his upbeat view on the economy, suggesting that he saw no imminent need to ramp up easing measures.

Expectations have risen sharply that the central bank’s next move will be to ease further with some economists predicting it could happen as early as this month.

Fed policymakers, moving towards their first interest rate reduction in a decade later this month, have sketched out arguments for whether rates should be cut by a quarter or a half a percentage point.

(Reporting by Kaori Kaneko; Editing by Shri Navaratnam)

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