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Summary Sept core consumer prices up 2.8% yr/yr vs f'cast +2.7%Core-core index up 4.2% yr/yr in Sept - govtData among factors to come under scrutiny at BOJ's Oct meetingTOKYO, Oct 20 (Reuters) - Japan's core inflation in September slowed below the 3% threshold for the first time in over a year but stayed above the central bank target, keeping alive expectations that policymakers will phase out ultra-easy monetary policy. "While inflation weakened in September, we think inflation will only fall below the BoJ's 2% target by the end of next year," said Marcel Thieliant, head of Asia-Pacific at Capital Economics. The nationwide core consumer price index (CPI), which excludes volatile fresh food costs, rose 2.8% in September from a year earlier - the first time it has slowed below 3% since August 2022, government data showed on Friday. All the same, the rate has tracked above the BOJ's 2% target for 18 straight months. Reporting by Takahiko Wada and Leika Kihara; Editing by Muralikumar Anantharaman and Shri NavaratnamOur Standards: The Thomson Reuters Trust Principles.

Persons: Marcel Thieliant, Takahiko Wada, Leika, Muralikumar Anantharaman Organizations: Bank of Japan, Capital Economics, Thomson Locations: TOKYO, Asia

A woman looks at items at a shop in Tokyo, Japan, March 24, 2023. The Tokyo core consumer price index (CPI), which excludes volatile fresh food but includes fuel costs, rose 2.5% in September from a year earlier, against a median market forecast for a 2.6% gain. It slowed from a 2.8% increase in August but exceeded the Bank of Japan's 2% target for the 16th straight month. Analysts expect inflation to keep slowing in coming months reflecting recent declines in commodity prices and the base effect of last year's sharp rises. The inflation overshoot led the BOJ to make modest tweaks to its bond yield control policy last month, a move investors saw as a shift away from decades of ultra-loose monetary policy.

Persons: Androniki, Kazuo Ueda, Leika Kihara, Sam Holmes Organizations: REUTERS, Bank of Japan's, Thomson Locations: Tokyo, Japan, TOKYO

However, there is uncertainty about how long households can weather price hikes and generate inflation driven more by demand, which holds the key to whether BOJ's 2% target can be achieved in a sustainable manner, analysts say. The Tokyo core consumer price index (CPI), which excludes volatile fresh food but includes fuel costs, rose 3.2% in June from a year earlier, accelerating from a 3.1% gain in May. While companies offered wage hikes unseen in three decades this year, inflation-adjusted real pay continues to fall in a sign of pain consumers are feeling from the wave of price hikes. BOJ Governor Kazuo Ueda has repeatedly said the BOJ will maintain ultra-loose policy until stronger wage growth keeps inflation sustainably around its 2% target. "The BOJ may revise up its inflation forecast but probably keep policy steady in July," said Takeshi Minami, chief economist at Norinchukin Research Institute.

Persons: Yoshiki Shinke, Teikoku Databank, Kazuo Ueda, Ryozo Himino, Takeshi Minami, Takahiko Wada, Leika, Satoshi Sugiyama, Kantaro, Sam Holmes Organizations: Bank of Japan, Dai, Research, Reuters, BOJ, Norinchukin Research, Thomson Locations: Tokyo, TOKYO

The inflation figures for Tokyo, which is seen as a leading indicator of nationwide trends, will likely keep alive expectations the Bank of Japan (BOJ) will phase out its massive stimulus this year. The increase in the Tokyo core consumer price index (CPI), which excludes volatile fresh food but includes fuel costs, followed a 3.1% gain in May and compared with a median market forecast for a 3.3% rise. With inflation already exceeding its target, markets are rife with speculation the BOJ could soon phase out ultra-loose monetary policy under new governor Kazuo Ueda. Ueda has repeatedly said inflation will slow in coming months as cost-push factors dissipate, and that the BOJ will maintain ultra-loose policy until stronger wage growth ensures Japan can sustainably see inflation hit its 2% target. Reporting by Takahiko Wada and Leika Kihara; Editing by Sam HolmesOur Standards: The Thomson Reuters Trust Principles.

Persons: Kazuo Ueda, Ueda, Takahiko Wada, Leika, Sam Holmes Organizations: Bank of Japan, Thomson Locations: Tokyo, TOKYO, Japan's, Japan

Services inflation accelerated to 1.7% in April from 1.5% in March, the data showed, suggesting that rising labour costs may be starting to feed into broader consumer inflation. "Given stubborn food price pressures, we now expect underlying inflation to peak at 4.5% by mid-year," said Darren Tay, Japan economist at Capital Economics. "But the inflationary cycle is probably at its tail end - producer price inflation has fallen significantly over the past three months. Ueda has stressed the need to keep monetary policy ultra-loose until inflation is sustainably around 2% and accompanied by wage hikes. He has also said Japan's core consumer inflation will slow back below 2% toward the latter half of the current fiscal year ending in March 2024.

While factory output rebounded in February, some analysts warn of mounting downside risks as slumping global demand for technology goods hits the country's exports. Inflation will probably stay elevated at least during the first half of this year," said Yoshiki Shike, chief economist at Dai-ichi Life Research Institute. Separately, factory output rose 4.5% in February from January, better than a forecast 2.7% gain and rebounding from a revised 5.3% drop in January, on easing supply bottlenecks for carmakers. "There's a bigger risk of a downgrade in manufacturers' output plans due to weaknesses in the information-technology (IT) sector. Global demand is shifting away from goods towards services, which is bad news for Japan's export-reliant economy," Shinke of Dai-ichi Life Research said.

The data underscores the challenge incoming Bank of Japan (BOJ) Governor Kazuo Ueda faces in assessing whether the recent cost-driven inflation will shift to one backed by solid demand and wage growth. The pace of increase slowed from a 3.3% gain in February and a nearly 42-year high of 4.3% hit in January, due largely to the effect of government subsidies to curb utility bills. In a glimmer of hope, factory output rose 4.5% in February from the previous month, government data showed on Friday, more than a median market forecast for a 2.7% gain. Manufacturers surveyed by the government expect to increase output by 2.3% in March and by 4.4% in April, the output data showed. Reporting by Takahiko Wada and Leika Kihara; Editing by Sam Holmes and Jacqueline WongOur Standards: The Thomson Reuters Trust Principles.

With inflation still exceeding the Bank of Japan's 2% target, the data will keep alive market expectations of a near-term tweak to its bond yield control policy, analysts say. The core consumer price index (CPI), which excludes volatile fresh food but includes oil products, rose 3.1% in February from a year earlier, government data showed, matching a median market forecast and slowing sharply from a 41-year high of 4.2% seen in January. "The new BOJ leadership will scrutinise Japan's price trend, as well as U.S. and European developments, in deciding its policy move," he said. But some BOJ policymakers have flagged the chance inflation could exceed initial expectations, as price hikes and wage gains show sign of broadening. Reporting by Takahiko Wada and Leika Kihara; Editing by Sam HolmesOur Standards: The Thomson Reuters Trust Principles.

It followed a 3.9% rise in December and stayed above the central bank's 2% target for an eighth straight month, data showed on Friday. "These readings point squarely at a further, large increase in inflation at the national level this month," said Darren Tay, Japan economist at Capital Economics. Government measures to lower energy bills will kick in next month and bring inflation down by about 1% point," he said. The BOJ kept monetary policy ultra-loose this month but raised its inflation forecasts in fresh quarterly projections, as companies continued to pass on higher raw material costs to households. Kuroda, whose term will end in April, has stressed the need to keep monetary policy ultra-loose until wages rise more, changing the recent cost-push inflation into inflation driven by robust domestic demand.

The increase in the core consumer price index (CPI), which excludes volatile fresh food but includes oil costs, matched a median market forecast and followed a 3.7% annual gain seen in November. The annual rise in core CPI thus exceeded the BOJ's 2% target for a ninth straight month. We might see inflation stay above the BOJ's 2% target well into autumn this year," he said. Core-core CPI, which strips away both fresh food and energy costs, was 3.0% higher in December than a year earlier, accelerating from a 2.8% gain seen in November. The BOJ kept monetary policy ultra-loose on Wednesday but raised its inflation forecasts in fresh quarterly projections, as companies continued to pass on higher raw material costs to households.

If inflation stays around 2% and Japan sees significant wage hikes, the BOJ could normalise monetary policy. "Supply shock is behind the recent pick-up in inflation," said Yasunari Ueno, chief market economist at Mizuho Securities. Dai-ichi Life's Shinke expects core consumer inflation to accelerate further in January, before slowing due to the effect of government subsidies aimed at curbing utility bills. The base effect of last year's sharp rise in consumer prices will also slow the pace of increase in inflation later this year, analysts say. BOJ Governor Haruhiko Kuroda, whose term will end in April, has stressed the need to keep monetary policy ultra-loose until wages rise more, changing the recent cost-push inflation into inflation driven by robust domestic demand.

Summary Tokyo Nov core CPI up 3.5% vs f'cast +3.4%Tokyo CPI stays above BOJ's 2% target for 6 straight monthsData underscores broadening inflationary pressureTOKYO, Nov 25 (Reuters) - Core consumer prices in Japan's capital, considered a leading indicator of nationwide trends, rose 3.6% in November from a year earlier, marking the fastest annual pace in 40 years in a sign of broadening inflationary pressure. The rise in the Tokyo core consumer price index (CPI), which excludes fresh food but includes fuel costs, exceeded a median market forecast for a 3.5% gain and accelerated from a 3.4% increase in October, government data showed on Friday. Core consumer inflation in Tokyo remained above the Bank of Japan's 2% target for six straight months in November, a sign that rising raw material costs were steadily pushing up a broad range of prices for daily necessities. The Tokyo core-core CPI index, which strips away both fresh food and fuel costs, rose 2.5% in November from a year earlier, pacing up from a 2.2% gain in October. Reporting by Takahiko Wada and Leika Kihara Editing by Chang-Ran Kim and Sam HolmesOur Standards: The Thomson Reuters Trust Principles.

TOKYO, Oct 28 (Reuters) - Core consumer prices in Japan's capital, a leading indicator of nationwide figures, rose 3.4% in October from a year earlier, data showed on Friday, marking the fastest annual pace since 1989 in a sign of broadening inflationary pressure. The rise in the Tokyo core consumer price index (CPI), which excludes volatile fresh food but includes oil costs, exceeded a median market forecast for a 3.1% gain and followed a 2.8% gain in September. Inflation in the Tokyo area thus exceeded the central bank's 2% target for five straight months. BOJ Governor Haruhiko Kuroda has repeatedly said the bank must maintain ultra-low interest rates on the view the recent cost-push inflation will likely prove temporary. Reporting by Takahiko Wada and Leika Kihara; Editing by Chang-Ran Kim and Sam HolmesOur Standards: The Thomson Reuters Trust Principles.

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