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.

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.

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

The success of the Sanseito party could reshape Japan’s domestic and foreign policy. It also aligns Japan with political trends in many other parts of the world.

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

Japanese Prime Minister Shigeru Ishiba on Monday stressed the need to establish a common understanding among parties on the pros and cons of cutting the country's sales tax rate.

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.