By Kantaro Komiya
TOKYO (Reuters) - Japan's core inflation likely eased in July, according to a Reuters poll of analysts, weighed by softer commodity prices, although the indicator is set hold above the central bank's 2% target for the 16th straight month.
The poll also showed Japanese exports likely saw the first year-on-year contraction in more than two years in July, hit by weak global demand.
The core consumer price index (CPI), which excludes fresh food but includes energy items, likely grew 3.1% in July from a year earlier, the median estimate of 17 economists showed. That would be down from 3.3% in June and the slowest reading in four months.
Japan's core CPI hit a 41-year-high of 4.2% in January on broadening retail price hikes but has since ranged between 3.1-3.4%, due to the government's energy subsidies and easing pressures from the commodity market rally.
"While price hikes in food items and other goods continued, falling crude oil prices would be reflected downwardly in energy items such as electricity bills," said Shumpei Fujita, economist at Mitsubishi UFJ (NYSE:MUFG) Research and Consulting.
Crude oil prices hit new peaks this week, breaking away from the downtrend earlier this year. Electricity bills in the Japanese CPI are determined by energy import prices several months before, the Bank of Japan has said previously.
Japan's wholesale inflation slowed in July for a seventh straight month due to softer energy costs, data showed on Thursday.
Exports likely fell 0.8% in July from a year earlier, marking the first decrease since February 2021, according to the poll. The recovery in car shipments was offset by weak demand for other export items due to the global economic slowdown, analysts said.
Core machinery orders, a leading indicator of business spending, likely rose 3.6% on month in June, after a 7.6% drop in May, the poll also showed.
The government will release CPI data at 08:30 a.m. on Aug 18 (2330 GMT, Aug 17). Trade and machinery orders data are due at 08:50 a.m. on Aug 17 (2350 GMT, Aug 16).