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.

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

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.

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

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.

Japan’s July consumer price inflation data was broadly in line with the market consensus. Headline inflation slowed thanks to falling energy and utility prices. Yet, core prices remain sticky and well above 3%.

It has stayed put despite headline and core inflation running above its target of 2% since April 2022, and despite headline inflation's two-year high of 4% in January. So-called "core-core ...

Japan's core inflation rate in July likely slowed from the previous month but remained above the Bank of Japan's 2% target, a Reuters poll showed, adding to pressure on the central bank to raise interest rates.

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.