Investing.com-- Consumer inflation in Japan's capital rose in July, with core prices coming in sight of the Bank of Japan's target range amid high energy prices and rising import costs due to a weak yen.
Core consumer price index inflation– which excludes volatile fresh food prices– rose to 1.9% year-on-year in July, government data showed on Friday. The print was a shade above expectations of 1.8% and accelerated from the 1.6% seen in June.
A core reading that excludes both fresh food and energy prices rose to 2.0% in July from 1.9% in the prior month. The print is closely watched by the BOJ as a gauge of underlying inflation.
Headline CPI inflation rose to 2.0% in July from 1.7% in June.
Friday's data showed Japanese inflation continuing to pick up amid support from elevated energy prices, especially as a resurgence in U.S.-Iran hostilities disrupted oil and gas supplies from the Middle East.
A weak yen exacerbated this trend, given that Japan relies heavily on food and energy imports. While government subsidies had so far shielded consumers from higher energy prices, producer inflation rose sharply in recent months, heralding a spillover into consumer prices.
The yen hit its weakest level in 40 years in July, but recovered sharply this week amid suspected government intervention in currency markets.
Tokyo inflation data usually acts as a bellwether for nationwide inflation, given the region's economic prevalence.
Friday's data also came just hours before the conclusion of a BOJ meeting, with the central bank widely expected to leave rates steady. But increasingly sticky inflation gives the BOJ more impetus to maintain its hawkish bias and to hike rates further in the coming months.
The BOJ raised rates by 25 basis points to 1.0% in June, and warned that sticky inflation and a weak yen were likely to invite more hikes in the coming months.
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