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Separate data from the Ministry of Finance will likely show that
export growth slowed down year-on-year in June, undershooting
import gains and leaving behind a trade deficit.
Data from the internal affairs and communications ministry is
expected to show on July 19 that the core Consumer Prices Index,
which excludes fresh food, rose 2.7% year-on-year in June,
faster than the previous month's 2.5% rise.
That would mean that inflation has remained above the Bank of
Japan's 2% target for the 27th straight month, concerning the
BOJ which reckons inflation is being powered by external cost
pressures, rather than the domestic demand which policymakers
are trying to encourage.
In Japan, inflation has been fuelled by higher raw materials and
fuel import costs, exacerbated by a weak yen.
Normalizing monetary policy will need a "virtuous growth cycle"
materializing in Japan, the BOJ has said, in which solid wage
hikes are accompanied by durable inflation and household
consumption.
The data will be scrutinized by the BOJ at its policy-setting
meeting on July 30-31 at which the central bank will review its
projections for GDP growth and inflation.
Some investors are betting the central bank will raise interest
rates in July, while cutting its government bond buying as a
step towards normalising monetary policy. Earlier this year the
BOJ began unwinding its unconventional policy, raising interest
rates in March for the first time since 2007.
Japan's exports likely rose 6.4% on year in June, slowing
sharply from the previous month's 13.5% gain. Imports were
forecast to have grown 9.3% versus 9.5% in May, resulting in a
trade deficit in June of 240 billion yen ($1.51 billion). The
MOF trade data is due to be released on July 18.
($1 = 159.1800 yen)
(Reporting by Tetsushi Kajimoto; Editing by Toby Chopra)
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