Japan’s consumer price growth picked up in December, adding to evidence of steady inflation just hours before the central bank announces its rate decision.

Japan's central bank has increased the cost of borrowing to its highest level in 17 years after consumer price rises accelerated in December. The move by the Bank of Japan (BOJ) to raise its short-term policy rate to "around 0.5 per cent" comes just hours after the latest economic data showed prices rose last month at the fastest pace in 16 months.

The Bank of Japan on Friday raised the benchmark rate by 0.25 percentage points to 0.5 per cent. Consumer price inflation data for December was also released. Wit