Japan's core inflation cooled to 3.3% in June, coming down from a 29-month high of 3.7% as rice inflation showed signs of easing. The figure — which strips out costs for fresh food — was in line with the 3.3% expected by economists polled by Reuters. Headline inflation in the country dropped to 3.3%, coming down from 3.5% in May.

Japan's core inflation slowed in June but stayed above the central bank's 2% target for well over three years, highlighting lingering price pressures that back market expectations for further interest rate rises.

Japan's annual inflation rate eased to 3.3% in June 2025 from 3.5% in the previous month, marking the lowest reading since last November. Japan's core CPI also rose by 3.3% year-on-year in June 2025,

Voters angry at inflation turned to other parties, notably the "Japanese first" Sanseito, which made strong gains with its "anti-globalist" drive reminiscent of US President Donald Trump's agenda.

Japanese Prime Minister Shigeru Ishiba clung on Monday even after his coalition suffered what he called an "extremely regrettable" election result, as painful new US tariffs loom.

Japanese Prime Minister Shigeru Ishiba on Monday stressed the need to establish a common understanding among parties on the pros and cons of cutting the country's sales tax rate.

The election debacle comes only months after Shigeru Ishiba's coalition was forced into a minority government in the lower house, in the Liberal Democratic Party's worst result in 15 years.

Japan’s inability to lift inflation is “one of the biggest unsolved challenges in the profession,” said Mark Gertler, a professor of economics at New York University who has studied the issue.

Japan holds Upper House elections every three years to fill half the chamber’s 248 seats. This year, 124 regular seats and one extra vacancy are being contested.