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Tokyo core CPI rises 3.3% in Feb, matches forecast
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Inflation exceeds BOJ's target for 9th straight month
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Slowdown reflects effect of govt steps to curb utility
bills
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Index excluding fuel rises 3.2%, hits three-decade high
(Adds analyst quote, details on Tokyo CPI data, jobless data)
By Leika Kihara and Takahiko Wada
TOKYO, March 3 (Reuters) - Core consumer inflation in
Japan's capital Tokyo slowed in February as the effect of
government energy subsidies kicked in, though an index stripping
away the effect of fuel hit a fresh three-decade high in a sign
of broadening inflationary pressure.
Separate data showed Japan's jobless rate hit a three-year
low of 2.4% in January, suggesting intensifying labour shortages
will prod companies to raise wages and help ease the pain
households are feeling from rising costs of living.
The readouts cast doubt on the Bank of Japan's view the
recent cost-driven inflation will prove temporary, and will
likely keep the central bank under pressure to phase out its
massive monetary stimulus, analysts say.
"Inflation in the capital has fallen less than we
expected last month, which suggests some upside risks to our
forecast for inflation to fall below the Bank of Japan's 2%
target by mid-year," said Darren Tay, Japan economist at Capital
Economics.
Core consumer prices in Tokyo, a leading indicator of
nationwide trends, rose 3.3% in February from a year earlier,
matching market forecasts and slowing from a nearly 42-year high
of 4.3% hit in January, government data showed on Friday.
The Tokyo core consumer price index (CPI), which excludes
fresh food but includes fuel costs, exceeded the BOJ's 2% target
for nine straight months.
The slowdown was mostly due to the effect of government
energy subsidies to curb soaring utility bills, the data showed.
A separate index for Tokyo stripping away both fresh food
and energy prices, which is closely watched by the BOJ as a
gauge of price pressures driven by domestic demand, was 3.2%
higher in February than a year earlier, picking up from
January's 3.0% rise.
It marked the fastest year-on-year pace of increase
since August 1991, when the index also rose 3.2%.
Energy costs rose 5.3% in February from a year earlier, much
slower than a 26.0% spike in January. But ex-fresh food prices
were up 7.8% in February, faster than a 7.4% rise in January.
Service inflation, which the BOJ sees as key to achieving
sustained wage growth, perked up to 1.3% in February from 1.2%
in January, the data showed.
Nationwide core consumer prices rose 4.2% in January from a
year earlier, hitting a fresh 41-year high, as an increasing
number of companies passed on higher costs to households.
With inflation exceeding its 2% target, the BOJ has seen its
yield curve control (YCC) come under attack from investors
betting it will soon have to change policy and allow a near-term
interest rate hike.
Markets are rife with speculation the central bank will
phase out or abandon YCC under incoming BOJ Governor Kazuo Ueda,
who succeeds incumbent Haruhiko Kuroda in April.
BOJ policymakers have repeatedly stressed the need to
maintain ultra-loose policy until inflation is seen sustainably
hitting their 2% target accompanied by higher wage growth.
Under YCC, the BOJ guides short-term interest rates at -0.1%
and the 10-year bond yield around 0% with an implicit ceiling
set at 0.5%.
(Reporting by Leika Kihara and Takahiko Wada; Additional
reporting by Kantaro Komiya; Editing by Lincoln Feast.)
