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.

The Sanseito party tapped into discontent over issues galvanizing voters worldwide: inflation, immigration and a political class dismissed as out of touch.

Japan's election outcome may put the central bank in a double bind as prospects of big spending could keep inflation elevated while potentially prolonged political paralysis and a global trade war provide compelling reasons to go slow on rate hikes.

The election Sunday is about inflation that has been running between 3.5 percent and 4 percent.

The bruising electoral defeat suffered by Japanese Prime Minister Shigeru Ishiba’s ruling coalition has plunged the country into a state of political uncertainty, creating a significant new dilemma for the Bank of Japan (BOJ).

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.

Rice prices in Japan soared 99.2 percent in June year-on-year, official data showed Friday, piling further pressure on Prime Minister Shigeru Ishiba ahead of elections this weekend.Overall, Japan's core inflation rate slowed to 3.

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 Prime Minister Shigeru Ishiba's future was unclear Monday after his coalition appeared to have disastrously lost its upper house majority in elections that saw strong gains by a right-wing populist party.