Core consumer inflation in Japan's capital Tokyo slowed in March for a second month but remained well above the central bank's 2% target, data showed on Friday, highlighting broadening price pressures in the world's third-largest economy.

A separate index stripping away energy prices rose at the fastest year-on-year pace since 1990, a sign the effect of government subsidies to curb utility bills did little to stem the rising cost of living for households.

The data underscores the challenge incoming Bank of Japan Governor Kazuo Ueda faces in assessing whether recent cost-driven inflation will shift to one backed by solid demand and wage growth as uncertainties cloud Japan's fragile economy.

While factory output rebounded in February, some analysts warn of mounting downside risks as slumping global demand for technology goods hits the country's exports.

Core consumer prices in Tokyo, a leading indicator of nationwide trends, rose 3.2% in March from a year earlier, compared with a median market forecast for a 3.1% gain.

The pace of increase slowed from a 3.3% gain in February and a nearly 42-year high of 4.3% hit in January, due largely to the effect of government subsidies to curb utility bills. ...continue reading