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UPDATE 1-Japan Nov consumer inflation ticks up but stays distant from BOJ goal

Leika Kihara

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* Nov nationwide core CPI rises 0.5% yr/yr, matching f'cast

* Nov core-core CPI rises 0.8% vs +0.7% in Oct

* Soft inflation seen forcing BOJ to maintain ultra-easy policy

TOKYO, Dec 20 (Reuters) - Japan's annual core consumer inflation ticked up in November but remained distant from the central bank's 2% inflation, data showed on Friday, as soft household spending keeps companies from passing on rising costs to shoppers.

The data underscores the challenge the Bank of Japan faces in firing up inflation to its elusive target, as sluggish global demand and the U.S.-China trade war cloud the economic outlook. On Thursday, the central bank kept monetary policy steady.

The core consumer price index (CPI), which includes oil costs but excludes volatile fresh food prices, rose 0.5% in November from a year earlier, government data showed on Friday, matching a median market forecast.

It followed a 0.4% increase in October.

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 0.8% in November from a year earlier.

Years of heavy money printing has failed to accelerate inflation to the BOJ's price goal, forcing the central bank to maintain a massive stimulus programme despite the rising costs such as the pain it inflicts on financial institutions.

With interest rates already zero or below that level, the BOJ is also left with few ammunition to fight the next economic downturn or prop up price growth.

Japan's economy, the world's third-largest, expanded an annualised 1.8% in the third quarter on resilient domestic demand and business spending.

But factory output suffered its largest fall in two years in October and big manufacturers' business sentiment sank to a near seven-year low in the fourth quarter, underscoring the fragile state of Japan's recovery.

Many analysts expect the economy to have contracted in the current quarter as a sales tax hike in October cools consumption. (Reporting by Leika Kihara Editing by Shri Navaratnam)