But the projected 0.5% year-on-year increase will be well off the Bank of Japan’s target and keep the central bank under pressure to maintain its massive monetary stimulus, analysts say.
“The increase is largely due to the effect of rising energy costs. Upward price pressure for other goods remains weak,” said Takumi Tsunoda, senior economist at Shinkin Central Bank.
The nationwide core consumer price index (CPI), which includes oil products but excludes volatile fresh food prices, rose 0.4% in June from a year earlier. Core consumer prices in Tokyo, available a month before the nationwide data, were seen likely to rise 0.3% in August from a year earlier after a 0.2% gain in July, according to economists polled by Reuters.
The government will announce the consumer inflation data at 8:30 Tokyo time on August 25.
More than four years of massive monetary stimulus has failed to accelerate inflation to the BoJ’s 2% target, underscoring the difficulty of eradicating the deflation that has plagued the country for two decades.
The CPI data will follow news this week that Japan’s economy expanded at the fastest pace in more than two years in the second quarter as consumer and company spending picked up, heralding a long-awaited bounce in domestic demand.
Nonetheless, wage growth and inflation remain subdued as companies remain wary of passing more of their profits to employees.
