Japan inflation slips to 2.6% in March

The year-on-year rise in prices excluding volatile fresh food -- against a market consensus of 2.7 percent -- followed a 2.8 percent February increase, in part thanks to lower gas bills.

Stripping out fresh food and energy, prices rose 2.9 percent, against market expectations of 3.0 percent, and edged down from 3.2 percent in February.

After years of deflation in the world's number four economy, the Bank of Japan (BoJ) has sought to generate rising prices with ultra-aggressive monetary stimulus policies.

But last month, it hiked borrowing costs rates for the first since 2007 and scrapped the world's last negative interest rate, in part thanks to meeting its two-percent inflation target.

The BoJ will hold a meeting next week, with most central bank watchers expecting rates to remain in place.

The BoJ, however, is expected to revise up its inflation forecast for this fiscal year in a quarterly report.