*
Tokyo core CPI rises 3.5% in April yr/yr, beats forecast
*
Core-core CPI rises at fastest annual pace in four decades
*
Data highlights broadening inflationary pressure
(Adds chart.)
By Takaya Yamaguchi and Leika Kihara
TOKYO, April 28 (Reuters) - Core consumer inflation in
Japan's capital beat expectations in April and an index
stripping away fuel costs rose at the fastest pace in four
decades, highlighting the challenge the new central bank chief
faces in keeping ultra-low interest rates.
The data comes hours before the Bank of Japan's policy
meeting that concludes on Friday, where the board is likely to
produce new inflation forecasts that could offer clues on how
soon the central bank could phase out its massive stimulus.
The core consumer price index (CPI), which excludes volatile
fresh food but includes fuel costs, for Tokyo rose 3.5% in April
from a year earlier, government data showed on Friday, faster
than a median market for a 3.2% rise and well above the BOJ's 2%
target. It accelerated from a 3.2% increase in March.
The core-core CPI, which strips away both fresh food and
fuel costs, rose 3.8% in April from a year earlier, pacing up
from a 3.4% gain in March, the data showed.
The core-core index, which is closely watched by the BOJ in
gauging trend inflation, rose at the fastest annual pace since
April 1982, when it rose 4.2%.
The rise in the Tokyo's inflation, which is seen as a
leading indicator of nationwide trends, may cast doubt on the
BOJ's view that the recent cost-driven price rises are
temporary, some analysts say.
Separate data released on Friday showed Japan's factory
output rose 0.8% in March from the previous month, exceeding
market forecasts for a 0.5% gain.
Manufacturers surveyed by the government expect industrial
production to rise 4.1% in April and by 2.0% in May, a sign auto
output is recovering from disruptions caused by supply
constraints.
Japan's economy is finally recovering from the scars of the
COVID-19 pandemic, though risks of a global slowdown and rising
food prices hang over the outlook for exports and consumption.
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.
Markets, however, widely expect the BOJ to keep monetary
settings unchanged at Friday's policy meeting as it awaits more
clarity on whether recent wage increases will become durable
enough to keep inflation sustainably around its target.
<^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^
Japan's core inflation remains above BOJ target ^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^>
(Reporting by Takaya Yamaguchi and Leika Kihara; Additional
reporting by Kantaro Komiya; Editing by Chang-Ran Kim and Sam
Holmes)
