Japan's consumer price index flat for first time since May

TOKYO (AP) - Japan's core consumer price index posted its first flat reading in eight months in January, the government said Friday, adding to speculation that the central bank may put off another interest rate increase until this summer. 

The Ministry of Internal Affairs and Communications said the core index, which excludes volatile fresh food prices, was unchanged last month from its year-earlier level. 

The figure was as expected by economists surveyed by Dow Jones Newswires. 

January's on-year inflation figure was the weakest since May 2006, the last time the core CPI was unchanged on-year.  

In December, the core index rose 0.1 percent on year. 

Signs that consumer price inflation has yet to firmly take root are likely to boost speculation that the Bank of Japan would likely hold off on interest rate increases until parliamentary elections in July. 

The government is reluctant to stifle a nascent economic recovery. 

The latest data appears to be in line with the BOJ's own estimates. 

When the central bank raised rates by a quarter percentage point to 0.50 percent last week, BOJ Governor Toshihiko Fukui predicted that the core index might temporarily divert from its long-term uptrend and fall to "around zero'' in the coming months. 

Central bankers have also hinted that they're not in rush to hoist rates to a level they consider more in line with Japan's improving economy. 

Meanwhile, the preliminary core CPI for the Tokyo metropolitan area - a leading indicator of nationwide price trend - was flat on year in February, the data showed. 

That marked the first flat reading in five months, and was worse than economists' forecast for a 0.1 percent increase. 

Including fresh food prices, the Tokyo CPI was unchanged as well from a year earlier, the ministry said.  

The overall nationwide CPI for January meanwhile was flat on year, according to the data. 

The ministry also said the nationwide core index excluding food and energy prices posted the 13th straight month of decrease, falling 0.2 percent on year.

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