By Leika Kihara
TOKYO, Aug 28 (Reuters) – Core consumer prices in Tokyo rose 1.8% in August from a year earlier, data showed on Friday, creeping up towards the central bank’s 2% target, in a sign of broadening price pressures from the Middle East conflict.
The rise in the Tokyo core consumer price index (CPI), which excludes volatile fresh food costs, compared with median market forecasts for a 1.7% gain. It followed a 1.7% rise in July.
An index stripping away the effect of fresh food and fuel, which is closely watched by the Bank of Japan as a better gauge of trend inflation, rose 2.0% in August after a 1.8% gain in July.
The data, which is seen as a leading indicator of nationwide price trends, will be among factors the BOJ will scrutinise at its next policy meeting set for September 17 to 18.
After raising its key interest rate to a 31-year high of 1% in June, the BOJ kept monetary policy steady in July but issued its strongest comments to date about mounting inflation risk.
A recent spike in wholesale inflation, which reached 7.2% in July from a year earlier, has highlighted mounting price pressure from the Middle East conflict that will likely push up consumer prices with a lag, analysts said.
Sources have told Reuters that the BOJ is set to raise the rate as soon as September and is considering hiking more aggressively thereafter from the current pace of roughly two times a year. Under the current phase of normalisation, the central bank has hiked rates at a pace of roughly twice a year.
(Reporting by Leika Kihara; Editing by Muralikumar Anantharaman)
