<p>As interest in space exploration and remote power systems grows, Micro Nuclear Reactors (MNRs) are being explored for their compactness, long operational life, and inherent safety. However, challenges such as Radial Power Peaking (RPP), structural integrity, and fuel utilization under high-temperature conditions remain inadequately addressed. In this study, the issues of RPP, uneven power distribution, and related safety concerns have been analyzed. RPP occurs because neutron flux and subsequent fission rates decrease while moving from the core center toward the periphery. In the annular-fueled MNR core presented, a maximum power peaking factor of 1.28 is observed. RPP poses a significant design challenge as it induces geometric distortion, reduces the fuel clad gap, and may lead to Fuel Clad Mechanical Interaction (FCMI), which is treated as a design-basis operational constraint for long-term autonomous operation of the reactor presented in this study. Consequently, the designed 1 MWth core power must be reduced in proportion to the peaking factor, limiting the allowable operating power to 738 kWth to ensure local thermal-mechanical limits are not exceeded. This study proposes a novel, zone-based, sensitivity-informed non-uniform fuel enrichment framework that mitigates RPP without any physical design changes. For the annular-fueled MNR core, the strategy reduces RPP by 75%, enabling a 28.7% increase in safe operating power from 738 kWth to approximately 950 kWth.</p>