By Makiko Yamazaki
TOKYO (Reuters) – Core consumer prices in Japan’s capital rose 2.2% in February from a year earlier, data showed on Friday, slowing for the first time in four months but remaining well above the central bank’s 2% target.
The persistently high inflation will likely support the case for the central bank to continue its monetary policy tightening campaign.
The increase in the core consumer price index (CPI), which excludes volatile fresh food costs, was slower than a median market forecast of 2.3% and a 2.5% gain in January.
A separate index that strips away the effects of both fresh food and fuel costs, closely watched by the BOJ as a broader price trend indicator, rose 1.9% in February from a year earlier, advancing at the same pace as the previous month.
The Tokyo inflation figures are considered a leading indicator of nationwide trends.
The government in January reinstated subsidies to curb electricity and gas bills. The resumption of the subsidies was reflected in bills this month.
Upward price pressure could pick up again in a few months as the government plans to phase out the subsidies by the end of March.
Prices of food have also soared in recent months, prompting the government to order a release of stockpiled rice to farm cooperatives to bring down costs.
The BOJ ended a decade of massive monetary stimulus last year and raised its short-term interest rate to 0.5% from 0.25% in January on the view that Japan was on the cusp of sustainably hitting its 2% inflation target.
BOJ Governor Kazuo Ueda has said the central bank will keep raising interest rates if Japan makes continued progress in durably achieving 2% inflation, solid wage growth and domestic demand.
(Reporting by Makiko Yamazaki, Satoshi Sugiyama and Yoshifumi Takemoto; Editing by Sam Holmes)
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