"Inflation is clearly slowing from May, when it hit 3.7%, and is expected to continue easing for the rest of the year due to a moderation in rice price surges and the resumption of energy subsidies," said Kazutaka Maeda, economist at Meiji Yasuda Research Institute.

Japan's core consumer price index (CPI) rose by 3.1% in July, a slight decrease from June's 3.3% but still higher than the expected 3%. The inflation rate remains well above the Bank of Japan's 2% target,

Japan’s prices remained far above the BOJ’s target in July, even with a slowdown, and traders still expect another rate hike this year.