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(Bloomberg) -- The cost of living in Tokyo rose more than anticipated from the previous month, keeping the Bank of Japan on track for further interest rate hikes.

Consumer prices excluding fresh food rose 2.4% in March from a year earlier as inflation in processed food accelerated, according to the ministry of internal affairs Friday. The result was more than the median economist forecast of 2.2%, and higher than any estimate by economists surveyed by Bloomberg. Overall inflation also picked up to 2.9% from February’s 2.8%.

The yen temporarily gained against the dollar following the report, strengthening to as much as 150.77 against the greenback.

The leading indicator for nationwide inflation is likely to keep BOJ Governor Kazuo Ueda mulling over the right timing for further rate hikes. While US President Donald Trump’s tariffs have darkened the outlook for the global economy, Japan’s recent domestic data have illustrated progress toward the BOJ’s stable inflation target, helping speculation over the next rate increase.

While most economists expect the central bank to wait until June or July to raise interest rates again in their base case scenarios, many have said there’s a risk of an earlier move at the May 1 conclusion of the next board meeting.

“Inflation for food excluding fresh food is strong, as well as price gains for household durable goods and services.,” said Nobuyasu Atago, chief economist at Rakuten Securities Economic Research Institute and a former BOJ official. “The BOJ should expedite the timing of interest rate hikes, and I think there is still a possibility of another rate hike in May.”

Friday’s data showed continued upward pressure from food inflation as non-fresh foods rose 5.6%, including rice prices jumping around 90%. The spike in the cost of rice has caused widespread public concern, forcing the government to release emergency stockpiles of the country’s staple food this month for the first time.

Service prices also rose 0.8% from a year earlier, up from 0.6% in the previous month and the fastest pace since December. The gauge is closely watched by the BOJ to help get an assessment of underlying inflation.

What Bloomberg Economics Says...

“Tokyo’s consensus-beating March CPI data are hot — consistent with other signs the underlying inflation trend is likely to reach the Bank of Japan’s 2% target by summer, and bolstering the case for it to raise rates further.”

— Taro Kimura, economist