Core inflation in Japan's capital hit 2.5%, marking the fastest annual pace in nearly a year, well exceeding the central bank's 2% target and keeping alive market expectations for further interest rate hikes.

Consumer inflation in the Tokyo metropolitan area picked up slightly in January, government data showed Friday, supporting the Bank of Japan’s plan to pursue more interest-rate increases.

Tokyos consumer price index (CPI) inflation accelerated in January, reaching a near two-year high as strong private spending sustained price growth. The headline CPI rose 3.4% year-on-year, up from 3% in December,