Tokyo inflation slows, but above forecast
Inflation excluding fresh food, fuel accelerates to 1.8
Closely watched services inflation slows

TOKYO, Oct 25 Reuters Core inflation in Japan39;s capital in October dipped below the central bank39;s 2 target for the first time in five months, data showed on Friday, potentially complicating the central bank39;s quest to raise interest rates further.

Closely watched services inflation this month also slowed, casting doubt on the Bank of Japan39;s expectations that higher wages would broaden cost pressure beyond goods and keep price rises durably around its 2 target.

To the BOJ39;s disappointment, price hikes that reflect rising labour costs are not spreading much in the service sector, which may be a cautionary signal for its price outlook, said Saisuke Sakai, a senior economist at Mizuho Research Technologies.

The Tokyo core consumer price index CPI, which excludes volatile fresh food costs, rose 1.8 in October yearonyear, decelerating from a 2 gain in September but outpacing a median market forecast of 1.7.

A separate corecore index that strips away the effects of both fresh food and fuel costs, closely watched by the BOJ as a broader price trend indicator, rose 1.8 in October from a year earlier after a 1.6 rise in September.

The Tokyo inflation figures are considered a leading indicator of nationwide trends and among factors the BOJ will scrutinise at next week39;s policy meeting, when the board releases fresh…