Japan’s core consumer prices were expected to fall for a fifth straight month in July, reflecting the strong yen’s downward pressure on import costs, a Reuters poll showed.
The core consumer price index (CPI), which includes oil products but excludes volatile fresh food prices, was seen to have fallen 0.4% in July from a year earlier, the poll of 19 economists found.
This outcome would be the same pace of annual decline seen in the index in April, May and June after the government changed the base year to 2015 from 2010 and components of CPI to reflect consumer spending trends more precisely.
The government kept this year’s consumer price calculation broadly unchanged.
“Downward pressure on consumer inflation from energy prices such as lower gasoline costs remains strong, while other import costs are also on the decline due to a strong yen,” said Takeshi Minami, chief economist at Norinchukin Research Institute.
“Core CPI will likely pick up around year-end or early next year to escape negative territory because of the waning downward pressure from energy costs. But the pace of recovery in consumer spending remains weak, so the upside of the index will probably be limited.”
The yen hit a seven-week high against the dollar this week after minutes from the Federal Reserve’s July meeting showed scant support for a hike in US interest rates soon. Japan’s internal affairs ministry will announce July core CPI on August 26. The BoJ increased stimulus in July but not nearly as aggressively as financial markets had expected, saying it would hold a review in September into the effects of its policies.
The central bank has already prepared a preliminary outline of a “comprehensive” policy review that will maintain the BoJ’s pledge to reach its 2% inflation target as soon as possible, sources familiar with its thinking said. Japan’s economic growth ground to a halt in April-June as weak exports and shaky domestic demand prompted companies to cut spending.

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