By Leika Kihara
TOKYO, Oct 30 (Reuters) - Annual core inflation in Japan's capital well exceeded the central bank's 2% target in October, data showed on Friday, highlighting mounting price pressure and cementing the case for further interest rate hikes.
The data came ahead of the Bank of Japan's policy announcement later on Friday. While the central bank is expected to keep policy steady, it is likely to stress its resolve to continue raising interest rates to prevent an inflation overshoot.
The core
consumer price index, which includes prices of fuel but not fresh food, in Tokyo rose 2.6% in October from the same month a year earlier, government data showed, matching a median market forecast. It followed a 2.7% rise in September.
An index stripping away the effect of volatile fresh food and fuel prices, which is closely watched by the BOJ as a more accurate gauge of trend inflation, rose 2.6% in October after a 2.9% gain in September.
The readings for Tokyo, seen as leading indicators of nationwide price trends, underscore the central bank's view that steady rises in producer prices will lead to broad-based, faster increases in consumer inflation.
The BOJ raised its policy rate to a 31-year high last month, with its governor signalling the bank has entered a phase focused on preventing underlying inflation from overshooting its target, raising the prospect of further rate hikes.
(Reporting by Leika Kihara; editing by Sam Holmes)
