TOKYO (REUTERS) - Japanese consumer inflation accelerated to a five-year high and factory output rose for a second straight month in October, more evidence a recovery in the world's third-largest economy is on track to extend into next year.
In an encouraging sign that Japan may be escaping persistent deflation, a narrower measure of prices that excludes both food and energy rose at its fastest pace in 15 years. The availability of jobs edged up to the highest in nearly six years, another signal the economic recovery is broadening.
The results bode well for Prime Minister Shinzo Abe's goal of reinvigorating the world's third-largest economy though his "Abenomics" stimulus policies, as rising output and demand for workers should help increase wages and consumer spending.
"We expect core inflation to approach 1 per cent at the end of this year and then to rise more gradually next year," said Mr Hidenobu Tokuda, an economist at Mizuho Research Institute. "We are making progress toward ending deflation."
The core consumer price index, which excludes prices of fresh food but includes oil products, rose 0.9 per cent last month from a year earlier, matching the median estimate. That marks a fifth straight month of gains, and the biggest year-on-year growth since November 2008.
The so-called core-core inflation index, which excludes food and energy prices and is similar to the core index used in the United States, rose 0.3 per cent last month from a year earlier. It was the first rise in the series in five years, and the fastest increase since August 1998.
Industrial output rose 0.5 per cent last month from September, a second straight rise but below the median rise of 2.0 per cent forecast by economists in a Reuters poll.
Manufacturers forecast output would rise 0.9 per cent this month and 2.1 per cent next month, suggesting strength in factory activity through the end of the year.
The jobs-to-applicants ratio rose more than expected to 0.98 in October, its highest since December 2007, meaning nearly one job is available per job seeker, data from the labour ministry showed.
The economy slowed in the July-September quarter as exports and household spending moderated, but economists expect growth to accelerate this quarter as exports recover and private consumption firms up.
Some Bank of Japan board members sought last month to water down the central bank's 2 per cent inflation target because of concerns about risks, such as slow rises in business investment and wages, that clouded the outlook, board minutes showed this week.