TOKYO, Jan 30: Japanese inflation slowed again in December, official data showed Friday, as weak consumer spending and falling energy prices challenge Tokyo's war on deflation, hiking pressure on the Bank of Japan to unleash more stimulus.
But an uptick in factory output suggests that the world's number-three economy may be crawling out of recession, analysts said, as the unemployment rate hit a 17-year low.
The mixed bag of economic data published Friday morning showed core consumer inflation slowed for a fifth straight month, while the internal affairs ministry reported that spending among Japanese households fell a greater-than-expected 3.4 per cent from a year ago, as a sales tax hike weighed on shopping nationwide.
Inflation is a key measure for Tokyo's bid to end years of stagnant or falling prices that have been blamed for holding back growth and denting firms' expansion plans.
Prices were on the rise, largely due to Japan's heavy post-Fukushima energy bills, but oil rates have tumbled in recent months and consumers snapped their wallets shut after the government raised sales taxes to 8.0 per cent from 5.0 per cent last year.
The economy quickly fell into recession, prompting Prime Minister Shinzo Abe to put off a second sales tax hike this year, which was aimed at taming Japan's enormous national debt.
The figures on Friday showed the inflation rate last month was at 2.5 per cent, down from 2.7 per cent in November. Adjusted for the tax hike, the rate rose just 0.5 per cent from a year earlier, well short of the Bank of Japan's 2.0 per cent inflation goal which it hopes to reach around the fiscal year ending in April next year.    ?AFP