Japan's core consumer inflation accelerated to 2.9 percent in October from a year earlier, with services prices marking the fastest gain in three decades, government data showed Friday, keeping up pressure on the Bank of Japan as the key gauge has remained above its target for well over a year.

The pace of increase in the nationwide core consumer price index excluding volatile fresh food items rose from 2.8 percent in September, as the government scrambles to ease the pain of higher prices on households with new inflation relief measures.

The closely watched gauge of inflation was above the BOJ's 2 percent target for the 19th straight month, due to the lingering effects of higher fuel and raw material costs, boosted by a weaker yen.

Stripping away both energy and fresh food prices, so-called core-core CPI increased 4.0 percent, in a sign of persisting inflationary pressures.

BOJ board members have begun to express growing confidence about attaining the inflation target in a "stable and sustainable" way as expectations rise for the momentum behind pay hikes to continue into next year.

"What we have seen so far is that consumption was rather solid in the face of cost-push inflation because of COVID-related catch-up demand. But there is uncertainty over whether that strength will continue," said Shinichiro Kobayashi, a senior economist at Mitsubishi UFJ Research and Consulting.

Higher prices for everyday goods have hurt consumer sentiment as wage growth has failed to keep pace with inflation. Japan's economic growth stalled in the July-September quarter due to weak spending by both consumers and companies.

Energy prices dropped 8.7 percent, weighed down by government subsidies for lowering gasoline and other fuel costs to support households. The fall was smaller than the previous month's 11.7 percent.

Kerosene prices rose 4.8 percent and gasoline increased 5.0 percent.

The government has decided to extend fuel subsidies until next spring as part of its economy-supporting package, which also includes temporary tax cuts and payouts to low-income households, along with tax incentives for companies to raise wages.

In a blow to households, food prices, other than those of perishables, rose 7.6 percent and durable goods gained 3.2 percent.

Services prices increased 2.1 percent, marking the fastest gain since 1993, reflecting the resilience of domestic demand in the aftermath of the COVID-19 shock.

A major booster was a 42.6 percent jump in accommodation fees as travel demand continues to recover with the return of foreign tourists to Japan.

It also came in response to a sharp drop a year earlier under the government's discount program to spur tourism after the sector was hit by the COVID-19 pandemic.

Economists say the recent rising trend of services prices is an indication that a growing number of firms are passing on costs to secure workers amid acute labor shortages in the services sector.

Kobayashi expects inflation to slow but only at a moderate pace, saying Japan is "at a crossroads" regarding whether a virtuous cycle of price and wage hikes will be firmly set in motion.

"We need to see whether companies will use their profits to raise pay and ramp up investment more. The ball is in their court," he added.

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