TOKYO, March 3 (Reuters) - Core consumer prices in Japan's capital, a leading indicator of nationwide trends, rose 3.3% in February from a year earlier, slowing sharply from a nearly 42-year peak hit last month in a sign the boost from rising raw material costs may be ebbing.
But inflation in Tokyo still exceeded the Bank of Japan's 2% target for the ninth straight month, keeping the central bank under pressure to phase out its economic stimulus.
The rise in the Tokyo core consumer price index (CPI), which excludes fresh food but includes fuel, matched a median market forecast.
It followed a 4.3% increase in January, which was the fastest year-on-year increase since May 1981, government data showed on Friday.
The data heightens the chance that nationwide consumer inflation will peak in February as the effect of past increases in fuel and raw material costs begin to taper off, analysts say.
The pace of inflation slowed due in part to the government's energy subsidies to ease the pain on households from soaring electricity bills.
An index for Tokyo excluding both fuel and fresh food costs, which is closely watched by the BOJ as a gauge of price pressures driven by domestic demand, was 3.2% higher in February than a year earlier, picking up from January's 3.0% rise.
Nationwide core consumer prices rose 4.2% in January from a year earlier, hitting a fresh 41-year high, as an increasing number of companies passed on higher costs to households.
With inflation exceeding its 2% target, the BOJ has seen its yield curve control (YCC) policy come under attack from investors betting it will soon have to change policy and allow a near-term interest rate hike.
Markets are rife with speculation the central bank will phase out or abandon YCC under incoming BOJ Governor Kazuo Ueda, who succeeds incumbent Haruhiko Kuroda in April.
Under YCC, the BOJ guides short-term interest rates at -0.1% and the 10-year bond yield around 0% with an implicit ceiling set at 0.5%.