Japan consumer inflation eases in June

Japanese inflation eased in June due to the slowing impact on prices from a sales tax hike and surging imports, official data showed Friday, figures that are likely to stoke renewed questions about Tokyo's war on deflation. The Bank of Japan (BoJ) has set an ambitious 2.0 per cent inflation target for next year as part of a wider government push to conquer years of debilitating deflation. The plan has shown signs of working as the inflation rate hit a three-decade high in May, but the price rises were still largely driven by Tokyo hiking sales taxes on April 1 and a weak yen driving up import costs. Japan's core consumer prices, stripping out volatile fresh food prices, rose 3.3 per cent year-on-year in June, slower than the 3.4 per cent rise in May. Excluding the impact of the tax increase to 8.0 per cent from 5.0 per cent, the rise in core inflation came in at 1.3 per cent, Dow Jones Newswires said, quoting a formula used by the Bank of Japan. That was slower than a 1.4 per cent increase in May and 1.5 per cent rise in April. June's inflation rise was partially due to a nearly 11 per cent jump in gasoline prices and higher electricity bills that reflected rising oil costs. Japan has seen its energy bill jump as it turned to expensive fossil fuel imports after shutting down its nuclear reactors in the wake of the Fukushima atomic crisis. Nuclear power once supplied more than one quarter of its power. The data Friday came a day after separate figures showed Japan's trade deficit ballooned to a record in the first half of the year as exports fell further in June, an imbalance partly driven by a weak yen and post-Fukushima energy imports.