Japan's Core Inflation Hits 1.6%, BOJ Rate Outlook Remains Tense

Japan's core consumer inflation rose to 1.6% in June, exceeding market expectations and quickening from a 1.4% increase in May.

The acceleration was partly driven by the base effect of last year's sharp decline in gasoline prices following government subsidies, according to Reuters.

Fuel inflation eased as rice prices fell, while service inflation slowed to 1.2% in June from 1.4% in May despite continued wage growth.

Economists expect inflationary pressures to strengthen later this year as rising producer prices, fueled by higher energy costs and a weaker yen, gradually feed through to consumers.