Data released on Friday showed that core inflation in Tokyo, Japan's capital, picked up in September, highlighting growing price pressures and providing strong support for expectations that the Bank of Japan will raise interest rates further.

The data, viewed as a leading indicator of nationwide inflation trends, will be one of the factors shaping the Bank of Japan's latest quarterly inflation forecasts.

The central bank will hold its next policy meeting from October 29 to 30, when those projections will be published.

Government data showed that Tokyo's core consumer price index, which excludes fresh food but includes fuel costs, rose 2.7% year-on-year in September, accelerating from a 1.8% gain in August and exceeding the market forecast of 2.4%.

After stripping out both fresh food and fuel prices, the so-called "core-core" CPI, which the Bank of Japan closely monitors as a better gauge of underlying inflation, climbed 3.0% in September, outpacing the 2.0% increase in August.

Although government fuel subsidies had previously kept core consumer inflation below the Bank of Japan's target level, a recent surge in wholesale inflation underscores mounting price pressures stemming from Middle East conflicts, a weak yen and robust artificial intelligence (AI)-related demand.

The Bank of Japan raised interest rates last month to their highest level in 31 years; Governor Kazuo Ueda signaled that the central bank has entered a new phase aimed at preventing inflation from overshooting its target, which also opens the door to further rate increases.