By Leika Kihara

TOKYO Japan's core inflation likely ran at 3.0% in August, according to a Reuters poll, staying above the central bank's 2% target for a 17th straight month in a sign of broadening price pressure in an economy trying to escape from a long deflationary phase.

The year-on-year increase in the core consumer price index (CPI), which excludes volatile fresh food but includes fuel costs, would be a slight slowdown from a 3.1% gain in July.

After hitting a peak of 4.2% in January, inflation continued to slow as the effect of last year's sharp rises in fuel and raw material prices dissipate.

But some analysts say the slowdown has not been as large as expected due to steady rises in food prices, and could keep inflation above the BOJ's target longer than initially thought.

"Food and daily necessities could see prices rise further. Inflationary pressure is also high among service industries like hotels reflecting surging labour costs," said Takeshi Minami, chief economist at Norinchuki Research Institute.

The government will release the August CPI data at 8:30 a.m. on Sept. 22 (2330GMT, Sept. 21), hours before the BOJ's scheduled release of the outcome of its two-day policy meeting.

Seeking to break free from deflation that has hobbled economic growth, Japan has kept interest rates ultra-low even as many other major central banks tightened monetary policy to combat rising inflation caused in part by global commodity inflation.

The BOJ has played down the near-term chance of phasing out its massive stimulus, arguing the recent cost-driven price rises need to change into demand-driven increases in inflation for the bank to consider hiking interest rates.

(Reporting by Leika Kihara)