Japan's Inflation Rate Slows Ahead of Expected Rate Hike

Japan's inflation rate slowed slightly in August, according to official data released on Friday. Core inflation fell to 1.7% from 1.8%, but remains close to the Bank of Japan's (BoJ) two percent target.

The reading was lower than market expectations that forecast the figure to hold steady at 1.8%. Government support for gasoline and electricity fees contributed to the slower pace of inflation, according to the data.

However, a surge in energy prices due to the Middle East crisis may push inflation above the BoJ's target before long. Oil prices are once again above $100 a barrel, putting pressure on Japan's economy due to its high dependence on oil imports.

Some BoJ members have signaled that they will raise interest rates by 0.25 percentage points to 1.25% this Friday, the highest level in over three decades. This move is aimed at supporting the yen and alleviating inflationary pressure.