Japan's core consumer price index rose 2.6%, significantly raising interest rate expectations.

In June,Public Resource Trading Center Bidding Network Japan's core consumer prices rose by 2.6% year-on-year, marking the second consecutive month of accelerated growth. The market expects that the Bank of Japan may soon raise interest rates.

This data will be one of the factors considered by the Bank of Japan at its policy meeting from July 30 to 31, during which the Board will release new quarterly forecasts and discuss whether to raise interest rates from the current near-zero levels.

The core consumer price index (CPI), which excludes the volatile fresh food prices, rose by 2.6%, slightly lower than the market expectation of 2.7%, and the previous month's increase was 2.5%.

With the government reducing subsidies aimed at curbing utility bills, energy costs in June rose by 7.7% year-on-year, up from 7.2% in May, driving overall inflation higher.

Another index, which excludes the impact of fresh food and fuel costs and is closely watched by the Bank of Japan as a broader gauge of price trends, rose by 2.2% in June, compared to 2.1% in May.

The data shows that the service inflation rate rose to 1.7% in June from 1.6% in May, indicating that businesses are passing on rising labor costs to consumers through price increases.

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