Japan official data shows inflation eases to 2.7% in August

Inflation in Japan eased to 2.7% in August from 3.1% in July, official data showed Friday.

The reading from the internal affairs ministry, which excludes volatile fresh food prices, was in line with market expectations.

But it remains above the Bank of Japan's 2% target, cementing expectations that it will hike interest rates this year.

Inflation continues to be driven by rice prices, which increased by 69% year-on-year in August after surges of around 100% in June and 91% in July.

Taro Kimura, an analyst with Bloomberg Economics, said that a pullback in inflation "won't change the big picture".

"Consumer prices will remain warm enough to keep the Bank of Japan on track to pare stimulus, likely as soon as October," he added.