TOKYO: Japan’s core inflation accelerated in March due to persistent rises in food costs, data showed on Friday, complicating the central bank’s task of weighing mounting price pressures against risks to the economy from higher U.S. tariffs.

The data comes ahead of the Bank of Japan’s policy meeting next week, when the central bank is set to keep interest rates steady at 0.5% and downgrade its growth estimates.

The core consumer price index (CPI), which includes oil products but excludes fresh food prices, rose 3.2% in March from a year earlier, government data showed, matching a median market forecast. It followed a 3% rise in February.

A separate index that strips away the effects of both fresh food and fuel costs and is closely watched by the BOJ as a broader price trend indicator rose 2.9% in March, compared with market forecasts for a 2.8% gain. It followed a 2.6% increase in February.

Stubbornly high food prices and rising wages have kept consumer inflation above the BOJ’s 2% target for nearly three years, underpinning market expectations the central bank will continue increasing interest rates from the current 0.5%.

Although Washington announced a 90-day postponement on plans for sweeping tariffs on goods imported into the U.S., it has maintained 25% tariffs on aluminium, steel and automobiles and a blanket 10% levy on imported goods.

That has complicated the BOJ’s rate-hike path by threatening to derail a moderate recovery in Japan’s export-driven economy. 

Reuters