Investing.com-- Consumer price index inflation in Tokyo grew more than expected in March, with a rise in underlying inflation keeping more interest rate hikes by the Bank of Japan squarely in focus.

Headline Tokyo CPI rose 2.9% in March from 2.8% in the prior month, government data showed on Friday.

Tokyo Core CPI , which excludes volatile fresh food prices, rose 2.4% in March, compared to expectations it would remain steady at 2.2% from February.

A core reading that excludes both volatile fresh food and energy prices grew 2.2% in March from 1.9% in the prior month. The reading is closely watched as a gauge of underlying inflation by the BOJ, and was now above the central bank’s annual 2% target.

Tokyo inflation usually heralds a similar trend from nationwide inflation. Friday’s data comes a week after nationwide CPI inflation data read slightly stronger than expected for Feb, with underlying inflation also ticking up.

Signs of sticky inflation spurred bets that the BOJ will hike rates sooner, rather than later, as it looks to normalize monetary policy in the face of improving Japanese economic growth.

The central bank had left interest rates unchanged earlier this month, but had forecast sticky inflation and improving growth, with both factors likely to give it more headroom to hike.

The central bank is also watching ongoing wage negotiations between major labor unions and companies for more cues, with a second year of bumper wage hikes expected to further the BOJ’s rate hike agenda.