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Japan's June core inflation seen near two-year low, exports slip: Reuters poll

TOKYO (Reuters) - Japan's core consumer inflation in June likely slowed to its weakest in nearly two years and exports fell for a seventh straight month, a Reuters poll showed, keeping the central bank under pressure to expand its stimulus program.

The core consumer price index, which includes oil products but excludes volatile fresh food costs, was expected to rise 0.6% in June from a year earlier, a poll of 15 economists showed, compared with 0.8% in May.

June core inflation would be the weakest since July 2017 when the index rose 0.5%.

"Falls in oil prices started to appear in prices of electricity and city gas. Gasoline costs also weighed on core CPI," said Kenta Maruyama, economist at Mitsubishi UFJ Research and Consulting.

"We expect core CPI will stay around 0.5% year-on-year as prices of electricity and city gas will contract and drop in mobile charges will push down consumer inflation."

Japan's major mobile carriers such as NTT Docomo Inc <9437.T> and KDDI Corp <9433.T> cut mobile charges to some users from June.

Analysts said the impact from a reduction in mobile charge fees was likely limited so far.

SMBC Nikko Securities estimates the cut in mobile charges likely pushed down core CPI by 0.03 parentage point in June from a year earlier.

The Internal Affairs Ministry will publish data on consumer prices at 8:30 a.m. local time on July 19 (2330 GMT on July 18).

The Bank of Japan last month kept monetary policy steady but Governor Haruhiko Kuroda signaled readiness to ramp up stimulus as global risks cloud the economic outlook.

Inflation has remained well below the BOJ's 2% consumer price target despite years of the central bank's stimulus steps.

The poll also forecast that exports in June fell 5.6% from a year earlier, down for a seventh successive month, but the pace of decline likely slowed from a 7.8% drop in May.

Imports were projected to have slipped 0.4% from a year earlier, following a 1.5% fall in May, the poll found.

As a result, Japan's trade balance probably swung back to a surplus of 420 billion yen ($3.9 billion) in June, after a revised 968.3 billion yen deficit in May.

"The export environment continues to be severe as the global economy is slowing down and U.S.-China trade frictions escalated," said Takeshi Minami, chief economist at Norinchukin Research Institute.

The Finance Ministry will publish trade data at 8:50 a.m. local time on July 18 (2350 GMT, July 17).

With the U.S.-China tariff war hurting global demand and clouding Japan's economic outlook, some analysts predict the BOJ could ease monetary policy as early as at this month's rate review.

(Reporting by Kaori Kaneko; Editing by Jacqueline Wong)

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