May nationwide core CPI up 2.5 yy vs f39;cast 2.6
Inflation excluding fuel, food slows to 2.1 in May
Service inflation slows in sign of weak wage passthrough
BOJ to gauge demanddriven price moves in timing rate hike

TOKYO, June 21 Reuters Japan39;s core inflation accelerated in May due to energy levies but an index that strips away the effect of fuel slowed for the ninth straight month, data showed on Friday, complicating the central bank39;s decision on how soon to raise interest rates.

The slowdown in socalled core core inflation, which is closely watched by the Bank of Japan as a key gauge of demanddriven price moves, casts doubt on the bank39;s view that rising wages will underpin consumption and keep inflation on track to durably hit its 2 target.

The core consumer price index CPI, which excludes volatile fresh food, rose 2.5 in May from a year earlier, government data showed, accelerating from the previous month39;s 2.2 gain due largely to a hike in the renewable energy levy. It was roughly in line with a median market forecast for a 2.6 gain.

But inflation as measured by an index stripping away both fresh food and fuel slowed to 2.1 in May from 2.4 in April, marking the lowest yearonyear increase since September 2022.

Privatesector service inflation slowed to 2.2 in May from 2.4 in the previous month, suggesting companies remained cautious about passing on labour costs.

The Bank of Japan has been arguing that the strong pay hikes agreed upon in this…