Core consumer inflation in Japan's capital Tokyo slowed in February as the effect of government energy subsidies kicked in.
But an index stripping away the effect of fuel hit a fresh three-decade high in a sign of broadening inflationary pressure.
Separate data showed Japan's jobless rate hit a three-year low of 2.4% in January.
This suggests that intensifying labour shortages will prod companies to raise wages and help ease the pain households are feeling from rising costs of living.
The readouts cast doubt on the Bank of Japan's view the recent cost-driven inflation will prove temporary, and will likely keep the central bank under pressure to phase out its massive monetary stimulus.
"Inflation in the capital has fallen less than we expected last month, which suggests some upside risks to our forecast for inflation to fall below the Bank of Japan's 2% target by mid-year," said Darren Tay, Japan economist at Capital Economics.
Core consumer prices in Tokyo, a leading indicator of nationwide trends, rose 3.3% in February from a year earlier.
They matched market forecasts and slowed from a nearly 42-year high of 4.3% hit in January, government data showed today.
The Tokyo core consumer price index (CPI), which excludes fresh food but includes fuel costs, exceeded the Bank of Japan'ss 2% target for nine months in a row.
The slowdown was mostly due to the effect of government energy subsidies to curb soaring utility bills, the data showed.
A separate index for Tokyo stripping away both fresh food and energy prices, which is closely watched by the Bank of Japan as a gauge of price pressures driven by domestic demand, was 3.2% higher in February than a year earlier, picking up from January's 3% rise.
It marked the fastest year-on-year pace of increase since August 1991, when the index also rose 3.2%.
Energy costs rose 5.3% in February from a year earlier, much slower than a 26% spike in January. But ex-fresh food prices were up 7.8% in February, faster than a 7.4% rise in January.
Service inflation, which the Bank of Japan sees as key to achieving sustained wage growth, perked up to 1.3% in February from 1.2% in January, the data showed.
Nationwide core consumer prices rose 4.2% in January from a year earlier, hitting a fresh 41-year high, as an increasing number of companies passed on higher costs to households.
With inflation exceeding its 2% target, the Bank of Japan has seen its yield curve control (YCC) come under attack from investors betting it will soon have to change policy and allow a near-term interest rate hike.
Markets are rife with speculation the central bank will phase out or abandon YCC under incoming Bank of Japan Governor Kazuo Ueda, who succeeds incumbent Haruhiko Kuroda in April.
Bank of Japan policymakers have repeatedly stressed the need to maintain ultra-loose policy until inflation is seen sustainably hitting their 2% target accompanied by higher wage growth.
