Tokyo's core consumer price index rose 1.8% year over year in August, accelerating from July's 1.7% increase and reinforcing market expectations for further policy tightening from the Bank of Japan.

The latest reading missed Trading Economics' 2% growth forecast.

The headline consumer price index for the capital climbed 1.9%, picking up from 1.8% in the previous month but also missing the Trading Economics estimate of 2.0%.

On a seasonally adjusted monthly basis, Tokyo's overall CPI rose 0.2% in August, while the core index increased 0.1% and the index excluding fresh food and energy gained 0.3%, according to preliminary data released Friday by the Statistics Bureau.

Food prices excluding fresh food rose 3.6% year over year, while housing costs increased 2.8%.

Energy prices fell 2%, with electricity prices down 2.4% and city gas prices down 1.6%.

Deputy Governor Ryozo Himino said Thursday that the central bank should continue raising interest rates and adjust monetary accommodation as underlying inflation approaches its 2% target.

He said the timing and pace of further rate increases would depend on developments in economic activity, prices and financial conditions.

Himino also said consumer-price inflation is expected to rise above 2% in the second half of fiscal 2026 as temporary downward pressures fade.

In separate labor market data released Friday, Japan's seasonally adjusted unemployment rate fell to 2.4% in July from 2.5% in June.

The reading missed the consensus forecast of 2.5% tracked by Investing.com.

The number of employed people stood at 68.5 million, unchanged from a year earlier, while the number of unemployed was also unchanged at 1.69 million.