Japan's Core Inflation Accelerates, Yet Remains Below BOJ Target

Japan's core inflation rate accelerated in June to 1.6%, still below the Bank of Japan's (BOJ) 2% target, but analysts expect it to rise later this year due to increasing producer prices and a weak yen.

The core consumer price index (CPI), which excludes fresh food prices, rose from a 1.4% increase in May, driven partly by the base effect of last year's sharp fall in gasoline prices caused by government subsidies.

However, food inflation moderated due to slumping rice prices, while service inflation slowed to 1.2%, despite steady wage gains.

The BOJ is closely watching an index that strips away volatile fresh food and fuel prices, which rose 1.7% in June from a year earlier after a 1.8% increase in May.