Japanese consumer spending in February rose for the first time in six months, but slowing wage growth and worries about overseas economies means the government remains under pressure to come up with stimulus to boost the economy.
Labor demand remained at the highest in two decades but the jobless rate rose slightly in February, in a tentative sign of a pause in recent improvements in the labor market.
Slowing wage growth and worries about risks posed by weak emerging market economies is likely to fuel speculation that Japan's government will launch a new round of stimulus spending and delay a sales tax increase scheduled for next year.
"I expect consumer spending to rise further, but the gains will be very moderate given low demand for durable goods," said Hidenobu Tokuda, senior economist at Mizuho Research Institute.
"It would still make sense for the government to consider some form of stimulus, because it may want to act in response to concerns that the global economy is slowing."
Japanese household spending rose 1.2 percent in February from a year earlier in price-adjusted real terms, the government data showed on Tuesday.
Increased spending on medical care, cars, dining out and mobile phone data plans drove gains in household spending, the data showed.
The rise compared with the median forecast for a 1.5 percent annual decline and followed a 3.1 percent annual decline in January.