July core consumer prices rise in line with forecasts
CPI excluding fuel, food rises 1.9 yryr in July
Core core CPI dips below 2 for first time in nearly 2 yrs

TOKYO, Aug 23 Reuters Japan39;s core inflation accelerated for a third straight month in July, data showed on Friday, but a slowdown in demanddriven price growth could complicate the central bank39;s decision on further interest hikes in coming months.

The nationwide core consumer price index CPI, which excludes fresh food items, rose 2.7 from a year earlier, faster than a 2.6 climb in June. It matched the median market forecast and put the inflation rate at or above the central bank39;s 2 target for the 28th straight month.

But the core core index, which excludes fresh food and energy costs and is closely watched by the Bank of Japan BOJ as a key gauge of broader inflation trends, rose 1.9 after increasing 2.2 in June. It dipped below the key 2 line for the first time since September 2022.

The increase in the core CPI reflected a phaseout of government subsidies to curb household utility bills, and with that factor excluded, the overall inflation has been slowing, said Masato Koike, senior economist at Sompo Institute Plus.

With utility bill relief reinstated and the yen39;s recent rebound now pushing down import costs, core CPI growth is likely to slow down hereafter, he said.

Inflation data is seen as key to further decisions on rate hikes by the BOJ, which surprised markets in July by raising…