By Leika Kihara

TOKYO (Reuters) -Core inflation in Japan’s capital accelerated in October and stayed above the central bank’s 2% target, data showed on Friday, keeping alive market expectations for a near-term interest rate hike.

But the increase was driven mostly by stubbornly high food costs with service-sector inflation staying modest, a sign companies were slow in passing through rising labour costs.

The data followed the Bank of Japan’s decision on Thursday to keep interest rates steady at 0.5% that drew two dissenters from the board fretting about broadening inflationary pressure.

The Tokyo core consumer price index (CPI), which excludes volatile fresh food costs, rose 2.8% in October from a year earlier, data showed on Friday, exceeding market forecasts for a 2.6% gain and accel

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