Inflation in Japan has cooled for the first time in four months, a trend largely attributed to the impact of government subsidies, just hours before the central bank announces its latest policy decision.

Official data released Friday revealed that the core consumer price index, which excludes fresh food, advanced 1.7% in August compared to the same period last year. This marks a slight deceleration from the 1.8% reading recorded in July, while economists had anticipated the figure would remain unchanged.

The Bank of Japan's preferred measure of price pressures, which strips out both fresh food and energy costs, climbed 1.9% year-on-year. Meanwhile, the broader headline CPI also registered a 1.9% increase.

Market consensus, gathered from a survey of economists, points to an anticipated 25-basis-point rate hike by the Bank of Japan on Friday, bringing the policy rate to 1.25%. If realised, this would constitute the second increase within three months, marking the most rapid pace of monetary tightening since 1990.