Japan's core consumer price index, which strips out fresh food while retaining energy costs, picked up to 1.8% in July from 1.6% a month earlier, reaching its strongest pace since January and matching the market consensus, according to data released Friday.
Despite the acceleration, inflation remained below the Bank of Japan's 2% target for a seventh straight month.
Government fuel subsidies helped contain the impact of higher oil prices stemming from the Middle East conflict.
Underlying price pressures were somewhat firmer, with CPI excluding both fresh food and fuel rising 1.9% year on year, up from 1.7% in June and marking its fastest pace in three months.
The figures add to expectations that the BOJ could resume tightening as soon as next month. The weak yen remains a source of upward price pressure despite the coordinated currency intervention by Japan and the U.S. in late July.
"Japan's July CPI report strengthens the case for the BOJ to stay alert to an inflation overshoot," Taro Kimura, an economist, said, as quoted by Bloomberg.
He said the pickup reflected higher input costs from the March-June oil price spike and the weaker yen, while a lower base from last year's energy subsidies also contributed to the acceleration.
The BOJ kept its policy rate at 1% at its July meeting, its highest level since September 1995, after raising rates by 25 basis points in June to prevent higher oil prices from fueling inflation.
The yen had hit a roughly 40-year low against the dollar in July before the coordinated intervention, but has since given back much of its gains, leaving the currency as a continuing source of inflationary pressure.
