Japanese consumer price growth matched expectations and personal consumption fell less than forecast in November, keeping alive speculation that the Bank of Japan could raise rates as early as next month.
But some analysts said the chance of a January rate rise has receded since a slowdown in Tokyo consumer prices, released a month ahead of the nationwide figures, signaled that nationwide price growth will remain tame.
Japan's core consumer price index (CPI), excluding volatile fresh food prices, rose 0.2% in November from a year earlier, government data showed Tuesday, matching economists' consensus forecast.
Core CPI in the Tokyo area rose 0.2% in December from a year earlier, lower than the consensus forecast of a 0.3% rise.
But in an encouraging sign for the BOJ, overall household spending in Japan fell 0.7% in November from a year earlier, a smaller pace of decline than a median market forecast of a 1.3 % drop.
Still, it was the 11th straight month of year-on-year declines. "It's hard to say anything positive about price conditions. The rate of price rises will likely stay at a super-low levels," said Yoshiki Shinke, an economist at Dai-ichi Life Research Institute.
"The latest data would not make the central bank feel positive about an interest rate hike," he said.
The yen inched down against the dollar after the data but mostly held in a narrow range around 118.85 yen .
The BOJ left its overnight call rate target at 0.25% at a policy board meeting last week. It has kept the rate unchanged since July, when it raised interest rates for first time in six years.
Many traders had bet on a policy shift in January, but such expectations have receded after remarks by BOJ Governor Toshihiko Fukui at a news conference last week and in a speech on Monday, in which his comments were not seen as seeking to prepare markets for a rate hike in January .
Instead, Fukui expressed caution over signs of weakness in personal consumption and price growth, stressing that future rate hikes would depend on the central bank's analysis of economic and price conditions.
Core CPI has been hovering just above zero percent in recent months and its pace of increase is expected to stay slow on a decline in crude oil prices.
Separate data showed that Japan's seasonally adjusted unemployment rate fell to 4.0% in November from 4.1% in October, while the jobs-to-applicants ratio for November was 1.06, meaning 106 jobs were available per 100 applicants.
That was unchanged from October but lower than economists' consensus forecast of 1.07.