Japan core inflation rises to 1.6 percent in June as energy costs increase

Core inflation in Japan rose to 1.6 percent in June from 1.4 percent in May, official data showed Friday, as higher oil-related costs and a weaker yen pushed up prices.

The internal affairs ministry figure excludes food prices. It matched average market expectations. The ministry said core inflation accelerated because imported energy and oil-related products continued to raise product prices.

The yen was trading near 40-year lows against the US dollar. The weaker currency increases the cost of imports such as oil and food for resource-poor Japan.

Inflation excluding both food and energy was 1.7 percent, down from 1.8 percent in May and just below market expectations of 1.8 percent. Unadjusted inflation was 1.7 percent, up from 1.5 percent in May and in line with market expectations.

The data showed price increases for bento boxed meal sets, chocolate, coffee beans, tuna, housing repairs and maintenance, and auto insurance.

The Bank of Japan is widely expected to keep interest rates unchanged on July 31 after raising them to a 31-year high last month. Most economists expect the next increase in December. Bloomberg News reported this week that policymakers were open to raising rates more quickly because of the weaker yen's effect on inflation.

The source said surging oil prices and concerns over debt are major reasons for the yen's weakness, while another key factor is the gap between Bank of Japan interest rates and those in the United States and other large economies.