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.

Critics of President Trump's tariff policies have been waiting for the import taxes to raise the inflation rate. That effect may be beginning.

The figure for June marks the fastest rate of inflation, which measures how quickly prices are rising, since January 2024.

A fresh report on Tuesday marked two consecutive months of rising inflation. Consumer prices rose 2.7% in June compared to a year ago, marking a notable surge of price increases as President Donald Trump's tariff policy took hold and some retailers warned they may pass some of the tax burden onto shoppers.

The report on producer prices adds to a mixed picture for inflation as the economy adjusts to the imposition of import tariffs.

The Bureau of Labor Statistics reported that the consumer price index (CPI), a popular inflation gauge, increased in June to 2.7% on an annual basis as prices rose for consumers.

President Donald Trump swept into office in January with a promise to tackle what he called the "inflation crisis" that had kicked off under his predecessor.

A number of factors, including a lack of significant gains in auto prices, are masking the extent of the shift.