Japan's consumer inflation seen rising 2.1% in second straight month

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Japan's consumer inflation seen rising 2.1% in second straight month

A shopper looks at packs of vegetables at a market in a shopping district in Tokyo.

TOKYO Reuters - Japan's core consumer price index is expected to rise 2.1% from a year ago, its second straight month of gains above the central bank's 2% inflation target, a Reuters poll showed on Friday.

There was a lull in the growth of energy costs due to an expansion of subsidies and a peak of recent fuel prices gains, but increases in food product prices likely drove consumer prices higher, according to analysts at Mizuho Research Technologies.

The CPI for the national consumer price index, which excludes volatile fresh food costs but includes energy costs, rose by 2.1% in April, the first time it had beaten the Bank of Japan's target in seven years.

The data is due on June 24 at 8: 30 a.m. June 23, 2330 GMT Analysts expect consumer inflation to stay around 2% in the coming months. The BOJ kept interest rates low and stuck to its guidance to maintain borrowing costs at present or lower levels, leaving it even more at odds with other central banks, which are aggressively tightening policy as they fight soaring inflation.

The business sentiment for big manufacturers is slightly less optimistic, due to the BOJ's quarterly survey results due on July 1 at 8: 50 a.m. June 30, 2350 GMT.

The headline index is expected to drop to plus 13 in June from plus 14 three months earlier in June due to supply disruptions that are in part due to China's strict COVID 19 lockdowns, according to the poll of 16 economists.

But the mood among big non-manufacturers is expected to improve to plus 14 from plus 9, suggesting that service sector firms are shaking off more of the pressure from the coronaviruses epidemic.

Analysts expect the index for big manufacturers to return to plus 14 for the next three months, while the index for major non-manufacturers will go up to plus 17 for the three months ahead.

Big firms will likely raise their capital spending plans by 8.9% for the current fiscal year, according to the poll, with analysts saying that companies are likely to roll out investments they postponed during the epidemic.