— Japan Apr Core CPI +0.6% Y/Y, 1st Rise in 26 Mo; Mar -0.1%
— Japan Apr Core CPI MNI Survey Median Forecast: +0.6% Y/Y
— Japan Apr CPI +0.6% Largest Y/Y Rise Since +1.0% In Nov 2008
— Japan CPI Y/Y Downward Pressure From Tuition Subsidy Ended
— Central Tokyo May Core CPI +0.1% Y/Y, 2nd Rise in Row; Apr +0.2%
— Japan Apr CPI Energy Costs +7.3% Y/Y Vs Mar +6.3%

TOKYO (MNI) – Japan’s national core consumer prices posted the
first annual growth in more than two years in April, as costlier energy
and food prices continued to ease deflationary pressure, data released
Friday by the Ministry of Internal Affairs and Communications showed.

The nationwide core CPI, which excludes fresh food but includes
energy, rose 0.6% in April from a year earlier, snapping the 25th
straight y/y drop, following -0.1% in March.

The April reading was the first positive figure since December
2008, when the core CPI rose 0.2% y/y. It also marked the biggest
year-on-year rise since November 2008, when the core CPI gained 1.0%.

April core CPI matched the median forecast of +0.6% by economists
polled by Market News International.

The biggest contributor to the April rise was an end to the
depressing effect on the y/y change in consumer prices that came from
lower high school tuition costs.

As part of measures to support consumer spending, the government
began providing subsidies for both public and private high school
education in April 2010. The dampening effect on CPI lasted for 12
months through March this year, slashing core CPI by 0.49 percentage
point y/y every month until March.

With food and energy costs on a general uptrend and Japanese firms
rushing to pass higher procurement costs onto retail prices, economists
have warned of an accelerated consumer inflation in coming months at a
time of a quake-induced economic downturn.

The Ministry of Agriculture, Forestry and Fisheries raised prices
of grain for domestic flour millers by an average of 18% to Y56,710 per
ton, effective on April 1, marking the biggest increase since 2008.

In Japan, the government, which alone has authority to import wheat
and sell it to flour millers, sets prices twice annually, in April and
October, based on its preceding half-year purchase prices.

Nissin Seifun Group Inc has decided to increase prices of its
home-use flour and pasta by up to 12% from July.

Starbucks Japan, among other coffee shops, have already hiked
coffee prices as well.

Meantime, total national CPI rose 0.3% y/y in April, the first rise
in five months after being flat for the fourth straight month until
March.

Overall energy costs in April rose 7.3% following a gain of 6.3% in
March.

On April 25, the national average of regular gasoline prices rose
to Y152.7, the highest level in more than 30 months, since the week that
started on Oct. 20, 2008, when the average price stood at Y157.4,
according to data from the Oil Information Center.

Meanwhile, central Tokyo core CPI rose 0.1% year-on-year in May
following +0.2% in April, which was the first y/y rise in 25 months
since +0.4% in March 2009.

Tokyo-area energy costs rose 3.4% in May following a 3.9% rise y/y
in April.

National CPI excluding food and energy, or the U.S. style core CPI,
fell 0.1% in April from the year before, posting the 28th consecutive
monthly fall following -0.7% in March. The fall was the smallest since
February 2009, when the index fell 0.1%.

The central Tokyo CPI excluding both food and energy rose 0.1% from
a year earlier in May after being flat in April, the first positive
reading since December 2008, when the index rose 0.2%.

CPI figures date to 1970 under the current 2005 base year.

tokyo@marketnews.com
** Market News International Tokyo Newsroom: 81-3-5403-4835 **

[TOPICS: M$J$$$,M$A$$$,MAJDS$,MT$$$$]