Japan’s consumer inflation remained well above the central bank’s target of 2% in July, reinforcing expectations of a coming interest-rate increase.

Japan’s 30-year government bond yields climbed to a fresh record, as concerns over sticky inflation and rising fiscal risks continue to weigh on sentiment.

Rice prices in Japan soared 90.7 per cent in July year-on-year, official data showed Friday, but the rate of increase slowed from previous months offering

The figure — which strips out costs for fresh food — was higher than the 3% expected by economists polled by Reuters.

The pace of Japan’s consumer inflation stayed well above the Bank of Japan’s target even as price growth moderated, supporting market speculation that the central bank will hike its benchmark interest rate again this year.

Nevertheless, some rate-setters at the BoJ have said that persistently high rice prices may prompt second-round effects in the coming months, indicating that they may be willing to consider raising rates in response to persistently high inflation even if the main driver is food.

The Japanese yen is slightly lower on Thursday. In the European session, USD/JPY is trading at 147.87, up 0.39% on the day. Japan's inflation expected to continue slowing. Japan r

The slowdown was attributed to lower energy prices but inflation on goods items remained strong, said Junya Takemoto, senior economist at Sumitomo Mitsui Banking Corporation. "A rapid decline (in inflation) is not expected," Takemoto said.

Japan's economy is caught between inflationary monetary policy and powerful agricultural interests. There is no easy way out.

Asia shares trade mixed on Friday, tracking an overnight decline on Wall Street amid ongoing tech stock sell-offs and anticipation of Powell's remarks. Meanwhile, Japanese shares had a mixed day. This came after new data showed consumer inflation in Japan remained well above the Bank of Japan's annual target.