Japan's election outcome may put the central bank in a double bind as prospects of big spending could keep inflation elevated while potentially prolonged political paralysis and a global trade war provide compelling reasons to go slow on rate hikes.

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.

The bruising electoral defeat suffered by Japanese Prime Minister Shigeru Ishiba’s ruling coalition has plunged the country into a state of political uncertainty, creating a significant new dilemma for the Bank of Japan (BOJ).

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.

Mr Shigeru Ishiba’s coalition appeared to have disastrously lost its Upper House majority. Read more at straitstimes.com. Read more at straitstimes.com.

TOKYO] Japan’s key price measure cooled a tad more than expected while remaining well above the Bank of Japan’s (BOJ) target, keeping pressure on Prime Minister Shigeru Ishiba to mollify voters as he heads into Sunday’s (Jul 20) national election.

Those who said they attached importance to leisure rather than to work, including study, last year accounted for the highest reading since comparable data became available in 2009.

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.

The election Sunday is about inflation that has been running between 3.5 percent and 4 percent.