KONTAN.CO.ID - TOKYO, Sept 27 (Reuters) - Core consumer prices in Japan's capital rose 2.0% in September from the previous year, data showed, matching the central bank's target in a sign the economy is making progress in meeting the criteria for further interest rate hikes.

The rise in Tokyo's core consumer price index (CPI), which excludes volatile fresh food costs, matched a median market forecast.

It slowed from a 2.4% increase in August due largely to the resumption of government subsidies to curb utility bills. Tokyo CPI data is considered a leading indicator of nationwide prices.

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A separate index that strips away the effects of both fresh food and fuel costs, closely watched by the Bank of Japan (BOJ) as a broader price trend indicator, increased 1.6% in September from a year earlier after rising at the same pace in August.

The BOJ ended negative interest rates in March and raised its short-term policy rate to 0.25% in July on the view Japan was making steady progress towards durably achieving its 2% inflation target.

Ueda has said the BOJ will keep raising rates if inflation remains on track to stably hit 2% as it projects, though he stressed the bank will spend time gauging how global economic uncertainties affect Japan's fragile recovery.

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Japan's economy expanded an annualised 2.9% in the second quarter as steady wage hikes underpinned consumer spending. Capital expenditure continues to grow, though soft demand in China and slowing U.S. growth cloud the outlook for the export-reliant country.

(Reporting by Leika Kihara; Editing by Sam Holmes)

Editor: Hasbi Maulana