Japan's benchmark money supply measure rose 3.1 percent from a year earlier in December, the Bank of Japan (BOJ) said in a preliminary report on Friday.

According to the central bank's figures, the aggregate accelerated from November's 3.0 percent rise and marked the highest growth since May 2010 when the index also rose by 3.1 percent, but remained some way off the all time high of 3.4 logged in October 2009.

Japan's broader M3 money supply meanwhile rose 2.6 percent in the recording period from a year earlier, following a 2.5 percent rise logged in November and a 2.3 percent increase booked in October, the central bank also said.

For 2011, M2 money stock increased 2.7 percent from a year earlier, following a 2.8 percent increase logged in 2010, while M3 money stock gained 2.2 percent after adding 2.1 percent in 2010, the BOJ's latest data showed.

The BOJ continues to focus on both M2 and M3 data to gauge economic activity at the moment, as the bank has no long-term historical data on the M3 aggregate yet.

Quasi-money -- cash equivalent and other assets that are easily convertible into cash -- rose 0.4 percent in December from a year earlier, after rising 0.3 percent in November, the BOJ's data also showed.

Certificates of deposits meanwhile dropped 0.4 percent in December after retreating 0.5 percent in November, the central bank noted.

Money supply or money stock, is the total amount of money available in an economy at a particular point in time and are usually defined as currency in circulation and demand deposits ( depositors' easily-accessed assets on the books of financial institutions).

Leading economists are quick to note that there is a direct relation between long-term price inflation and money-supply growth, at least for rapid increases in the amount of money in the economy.