TOKYO (REUTERS) - Japan's core consumer prices dropped at their fastest pace since late 2010 in November weighed by the government's travel discount campaign and weak energy prices, raising fears of a return to deflation.

Nationwide core consumer prices, which exclude volatile fresh food costs, fell 0.9 per cent in November from a year earlier, government data showed on Friday (Dec 18), matching a median market forecast.

It was the fourth straight month of falls and the fastest pace of year-on-year decline since September 2010, the data showed.

The data was released ahead of the central bank's policy decision, due later on Friday. The Bank of Japan is expected to keep settings unchanged but could extend a range of steps aimed at easing corporate funding strains.

The government's discount travel campaign to help the domestic tourism industry weighed on accommodation fees while weaker energy costs also pushed down consumer prices.

Overall consumer spending remained subdued as the coronavirus crisis prompted people to refrain from dining out and shopping.

Japan's cabinet on Tuesday approved a third supplementary budget to fund a US$708 billion (S$939 billion) stimulus package, to speed up the economic recovery from its Covid-induced decline.

The economy grew at the fastest pace on record in July-September, rebounding sharply from its biggest postwar slump, as exports and consumption recovered from severe falls caused by the pandemic.