Japan inflation slows for sixth straight month in January, retail sales down but factory output up

TOKYO (AFP) - Japanese inflation slowed for a sixth straight month in January as fuel costs fell, government data showed Friday despite the Bank of Japan's massive monetary easing to stoke growth.

Core consumer inflation, excluding volatile fresh food prices, came in at 2.2 per cent year-on-year, down from 2.5 percent in December, with the rise in overall consumer prices standing at 2.4 per cent, the internal affairs ministry said.

Prices climbed from year-earlier levels largely because the government raised sales tax from 5.0 per cent to 8.0 per cent on April 1 last year, which drove up retail prices.

Adjusted for the tax increase, the core consumer-price index rose a marginal 0.2 per cent from a year earlier in January, after growing 0.5 per cent in December, far short of the Bank of Japan's goal of 2.0 per cent inflation.

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 had been on the rise, largely due to Japan's heavy energy bills after the 2011 Fukushima crisis forced the shutdown of the country's nuclear reactors, but oil prices have tumbled in recent months and consumers snapped their wallets shut after the tax rise.

In other news, Japanese retail sales fell 2.0 per cent in January from a year earlier, more than economists'median estimate of a 1.3 per cent decline, government data showed on Friday, in a sign underlying demand remains weak.

But factory production in January rose a faster-than-expected 4.0 pe rcent on-month, growing for the second straight month, according to official data released Friday. The latest figures from the Ministry of Economy, Trade and Industry beat economists' median forecast for a 2.8 per cent rise, and followed a revised 0.8 per cent rise seen in December.