Japan inflation eases for sixth month in January Staff
Getty Images

Japan's consumer inflation eased in January for a sixth straight month increasing expectations that the Bank of Japan (BOJ) will have to undertake further stimulus measures to achieve its price target.

The consumer price index (CPI) rose 2.2 percent in January from the year-ago period, government data showed on Friday, compared with Reuters' forecast for a rise of 2.3 percent and down from a 2.5 percent rise in December.

Excluding the effects of the sales tax hike, the nationwide consumer price index (CPI) rose 0.2 percent, below expectations for a 0.3 percent increase and down from 0.5 percent in December.

The core Tokyo CPI for February, considered a leading indicator, rose 2.2 percent on year, unchanged from the previous month and in line with expectations.

Read MoreCash rich lenders bankroll Japan Inc's shopping spree

"The BOJ has continued to change its wording to explain its CPI outlook: it was 'around 1.25 percent', later revised to 'around 1.0 percent', and now 'CPI is likely to slow for the time being'. As the decline in energy prices has a positive effect on economic growth, further weakness in the CPI due to a fall in oil prices is unlikely to trigger immediate additional [quantitative easing]," Standard and Poor's said in a note before the data were released on Friday.

"We predict that by Q3, inflation is likely to accelerate again. The BOJ will most likely wait patiently until then," it said.

However Marcel Thieliant, Japan Economist at Capital Economics, believes further easing is likely.

"The ongoing slowdown in inflation increases the pressure on the BOJ to introduce more stimulus," Thieliant said, noting that he expects inflation will turn negative in the second quarter.

Tracking the fall in Japan's household spending
Tracking the fall in Japan's household spending

Data deluge

In other data, household spending for January fell 5.1 percent from the year before, versus expectations for a 4.1 percent decline and after declining 3.4 percent in the previous month.

"I see [the decline in household spending] as a sign that Japanese consumers have run out of growth and money," Robert Medd, partner at GMT Research, told CNBC.

"The sales tax hike has jacked up the cost of spending, while the amount of spending is the same, because the prices have gone up the actual things they consume has fallen. If you look at the pre-tax numbers, it is down 20 percent year-on year," he said.

Industrial output rose an annual 4.0 percent in the month, compared with forecasts for a 2.7 percent increase and after rising 0.8 percent in December.

Read MoreJapan Inc seesno need for 2 percent inflation or more easing

Japanese manufacturers were more upbeat about next month, however. They expect industrial output to rise 0.2 percent on month in February, above their previous forecast for a 1.8 percent decline, according to the Ministry of Economy, Trade and Industry.

Retail sales fell 2.0 percent in January, worse than expectations for a 1.3 percent decrease.

Meanwhile, the unemployment rate increased to 3.6 percent from 3.4 percent in the previous month. The jobs-to-applicants ratio remained unchanged at 1.14 - the highest level since March 1992.

Japan's economy has been on the backfoot ever since the government raised nationwide consumption tax to 8 percent from 5 percent last April, in a bid to reduce the country's massive debt.

The economy slipped into recession in the third quarter, contracting an annualized 1.6 percent after shrinking 7.3 percent in the second quarter.