By Leika Kihara and Takahiko Wada
TOKYO (Reuters) -Core inflation in Japan's capital slowed in November, underscoring the central bank's view that cost-push pressures in the world's third-largest economy will gradually dissipate.
While service prices — in focus as the central bank looks for signs of wage-driven inflation — marked their fastest pace of increase since 1994, analysts attributed the climb to a spike in hotel fees amid an influx of tourists.
The core consumer price index (CPI), which excludes volatile fresh food but includes fuel costs, for Tokyo rose 2.3% in November from a year earlier, government data showed on Tuesday, slightly below a median market forecast for a 2.4% gain.
It was slower than the 2.7% increase in October and matched a low marked in July last year, as fuel costs kept falling and price hikes for food moderated, the data showed.
The Tokyo index is considered a leading indicator of nationwide trends.
The so-called «core core» index that strips away both fresh food and fuel prices — closely watched by the BOJ as a gauge of broader price trends — rose 3.6% in November, slowing from a 3.8% gain in October.
The data will be among factors the BOJ will scrutinise at its next policy-setting meeting on Dec. 18-19.
With inflation having exceeded the BOJ's 2% inflation target for more than a year, many market players expect the bank to phase out its massive stimulus some time next year.
BOJ Governor Kazuo Ueda has stressed the need to keep policy ultra-loose until recent cost-push inflation is replaced by a demand-driven increase in prices backed by solid wage gains.
He has also said next year's annual wage negotiations and the outlook for service prices, which reflect labour costs, are key to
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