(MENAFN- AFP) Japan released a string of lacklustre economic data Friday with inflation hitting its lowest level for more than a year, dealing another blow to Tokyo's attempts to conquer years of falling prices and tepid growth.
The figures come after Prime Minister Shinzo Abe called a snap election and delayed a sales tax hike set for next year after a previous levy increase hammered spending and pushed the world's number three economy into recession.
Japanese consumer inflation came in at 2.9 percent in October compared with a year earlier, official data showed, matching market forecasts but slowing from 3.0 percent in September.
Prices mainly rose largely because Tokyo raised the sales tax from 5.0 percent to 8.0 percent on April 1.
Adjusted for the hike, nationwide core inflation rate came in at 0.9 percent, against 1.0 percent in the previous month and its lowest level since October 2013.
The weak reading makes the Bank of Japan's 2.0 percent inflation target -- which it initially aimed to hit in 2015 -- look increasingly out of reach.
The BoJ shocked markets last month by saying it would expand its asset-buying stimulus programme to about 80 trillion yen ($676 billion) annually, in a bid to overcome deflation and kickstart the economy.
"Even despite the BoJ's surprise move, we maintain our view that there is a very long way to go before achieving the +2.0 percent target," Credit Agricole said.
Also Friday, figures showed factory production in October edged up a better-than-expected 0.2 percent on-month, the second straight increase, as exports improved.
"It is a positive set of data that hints at hopes for future recovery in production," SMBC Nikko Securities said in a note.
- Mixed picture -
Separate figures showed the country's unemployment rate slipped to 3.5 percent from 3.6 percent, while retail sales rose 1.4 percent in October. However, household spending fell 4.0 percent on-year, the seventh successive decline.
"Although real GDP growth continued to be negative into July-September and Japan was in technical recession, demand for labour among firms is still robust likely thanks to the waning impact of (the) consumption tax hike," said Marcel Thieliant from Capital Economics.
But "despite the tight labour market, inflation continues to moderate... Price pressure should moderate further in the near-term, as the recent plunge in crude oil prices has yet to be reflected in the cost of energy imports," he added.
April's tax rise -- designed to help pay down one of the world's largest public debt mountains -- delivered a body blow to Abe's efforts to rev up growth, just as the long-laggard economy appeared to be turning a corner.
In response, Abe put off another hike due in late 2015 and called a snap election for next month that he described as a referendum on his policies, although observers said it was a strategic move to fend off party rivals ahead of a leadership vote next year.
Abe's growth blitz -- dubbed Abenomics -- launched in 2012 calls for big government spending as well as massive monetary easing and an overhaul of the highly regulated economy.
The cornerstone is the BoJ's inflation target, which aimed to reverse years of falling prices that gave consumers an incentive to hold off spending in the knowledge that goods would be cheaper in the future.
That created a deflationary spiral that held back wage growth and new hiring as firms capped expansion plans.
Preliminary GDP data this month showed Japan's economy shrank 0.4 percent, or at an annualised rate of 1.6 percent, in the July-September quarter.
That was well below market expectations for a 0.5 percent expansion, and followed a 1.9 percent contraction in the April-June quarter -- or 7.3 percent at an annualised rate.
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