Japan's core inflation cooled to 3.3% in June, coming down from a 29-month high of 3.7% as rice inflation showed signs of easing. The figure — which strips out costs for fresh food — was in line with the 3.3% expected by economists polled by Reuters. Headline inflation in the country dropped to 3.3%, coming down from 3.5% in May.

Japan's core inflation slowed in June but stayed above the central bank's 2% target for well over three years, highlighting lingering price pressures that back market expectations for further interest rate rises.

Japanese Prime Minister Shigeru Ishiba clung on Monday even after his coalition suffered what he called an "extremely regrettable" election result, as painful new US tariffs loom.

The election debacle comes only months after Shigeru Ishiba's coalition was forced into a minority government in the lower house, in the Liberal Democratic Party's worst result in 15 years.

Japanese Prime Minister Shigeru Ishiba on Monday stressed the need to establish a common understanding among parties on the pros and cons of cutting the country's sales tax rate.

Voters angry at inflation turned to other parties, notably the "Japanese first" Sanseito, which made strong gains with its "anti-globalist" drive reminiscent of US President Donald Trump's agenda.

Japan’s ruling coalition is on track to lose its majority in the upper house, according to exit polls from Sunday’s election cited by Reuters. The development could spell heightened political instability just as the country nears a critical trade deadline with the United States.

Japan’s inability to lift inflation is “one of the biggest unsolved challenges in the profession,” said Mark Gertler, a professor of economics at New York University who has studied the issue.

Japanese voters head to polls in a crucial upper house election amidst concerns over inflation and immigration. The Liberal Democratic Party, led by Prime Minister Shigeru Ishiba, risks losing control,