Japan's core consumer prices increased by 3.0% in February compared to a year ago, surpassing the central bank's target of 2%. Market expectations for further interest rate hikes were reinforced by this data, according to government statistics released on Friday.

The rise in the core consumer price index, excluding volatile fresh food costs, exceeded the market prediction of a 2.9% uptick. The inflation rate slowed from the previous month's 3.2% growth primarily due to the reintroduction of subsidies to control fuel expenses.

Another index that excludes the impact of fresh food and fuel prices, closely monitored by the Bank of Japan (BOJ) as an indicator of broader price trends, increased by 2.6% in February from the previous year, following a 2.5% rise in January. This marked the highest year-on-year growth since March 2024 when it rose by 2.9%.

While the BOJ maintained interest rates on Wednesday, Governor Kazuo Ueda pointed out that increasing food prices and unexpected wage growth might push underlying inflation upwards. The central bank's focus remains on the mounting domestic price pressures.

In response to Japan nearing its inflation target sustainably, the BOJ abandoned its decade-long stimulus program last year and raised interest rates to 0.5% in January. Policymakers at the BOJ indicated their willingness to continue raising interest rates if they are confident that Japan will experience a consistent inflation rate around 2%, fueled by solid wage increases.

(Adapted from a report by Leika Kihara; Edited to enhance clarity)