(Bloomberg) -- Tokyo's key inflation gauge held steady in July, as higher prices for mobile phone handsets offset smaller contributions from energy.
Consumer prices excluding fresh food rose 0.9% in July from a year earlier, compared with economists' median estimate of 0.8%, the internal affairs ministry reported Friday. The reading for Tokyo is considered an early indicator for nationwide price moves.
Key Insights
- Prices of household goods such as air conditioners and washing machines are rising ahead of a sales tax hike scheduled for October, but that isn't likely to halt the trend of sagging core inflation in the months ahead.
- Lower mobile phone service charges and free preschool education are among factors expected to drag inflation lower in coming months. Nationwide inflation excluding fresh food hit the lowest level in two years in June.
- The Bank of Japan is set to meet next week as a global shift in monetary policy is raising expectations for additional action, but the BOJ's options are limited after six years of radical stimulus.
- The sales tax hike October poses a risk to consumer spending once it takes place, though the government has lined up a series of measures to counter the impact.
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- Overall, consumer prices in Tokyo rose 0.9% in July, compared with economists' median estimate of 1.0%.
- Stripping out energy and fresh food, consumer prices climbed 0.8%, versus economists' median estimate of 0.7%.
--With assistance from Toru Fujioka, Yuko Takeo and Masahiro Hidaka.
To contact the reporter on this story: Yoshiaki Nohara in Tokyo at ynohara1@bloomberg.net
To contact the editors responsible for this story: Malcolm Scott at mscott23@bloomberg.net, Henry Hoenig, Jon Herskovitz
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