Japan’s inflation eased slightly in June but remained above the Bank of Japan’s (BOJ) target, keeping pressure on Prime Minister Shigeru Ishiba ahead of Sunday’s national election.

Core consumer prices (excluding fresh food) rose 3.3% year-on-year, down from May’s 3.7%—a two-year high. Economists had expected a 3.4% rise, with slower energy prices and subsidies helping to cool inflation. However, a deeper inflation measure that also excludes energy climbed 3.4%, the highest since January last year.

Despite the moderation, inflation remains strong, posing challenges for Ishiba’s coalition, which may lose its majority in the upcoming vote. The opposition has promised to increase fiscal spending to ease the burden on households.

Economists say the underlying inflation trend remains firm, and the BOJ may revise its inflation forecast upward. While the central bank is expected to hold rates steady on 31st July, rising prices could keep rate hikes on the table.

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