Japan Core Inflation Stays Below Target Despite Fuel Subsidies

Japan's core consumer prices rose 1.6% in June from a year earlier, staying below the Bank of Japan's (BOJ) 2% target for a fifth straight month. The increase matched market expectations and followed a 1.4% rise in May.

The core consumer price index (CPI), which excludes volatile fresh food prices, was driven by fuel subsidies offsetting rising raw material costs stemming from the Middle East conflict. An underlying inflation gauge, stripping away both fresh food and fuel, rose 1.7% in June after a 1.8% increase in May.

The data will be scrutinized at the BOJ's policy meeting next week, where it is expected to keep interest rates steady and issue fresh quarterly projections. The central bank raised interest rates to a 31-year high in June as part of its policy normalization.