TOKYO (AP) — Japan's consumer price index rose 1.3 percent in January and factory production also climbed, suggesting the recovery in the world's third-largest economy is holding steady ahead of an April 1 tax hike.
A raft of data released Friday suggest the economy may need still more help in weathering the 3 percent tax increase in April as many economists forecast a contraction will follow as consumers and businesses adjust to higher costs.
Factory output rose 4 percent in January from the month before on strong demand for vehicles, chemicals and machinery, a second straight month of increase, reaching the level it was at before a massive earthquake and tsunami hit in March 2011, the Ministry of Economy, Trade and Industry reported.
Demand is expected to rise further in February and March ahead of the tax increase.
The government and central bank have unleashed a flood of stimulus, both monetary and fiscal, aimed at breaking Japan free from a long spell of deflation, or falling prices, that is thought to discourage investment and spending.
Although January marked the eighth straight month of price increases, the 1.3 percent increase in core inflation excluding food prices matched the increase in December. Excluding both food and energy, prices rose 0.7 percent, also on a par with the month before.
The "'core' and 'core-core' measures have started to level off at levels well short of the target," Capital Economics said in a commentary. It said that suggests the Bank of Japan needs to do more to hit its eventual inflation target of 2 percent.
In other data:
— The jobless rate remained steady at 3.7 percent, with 104 job offers for every 100 job seekers. Companies generally have stepped up use of overtime and hiring of part-time workers to handle higher demand.
— Retail sales rose 1.4% from a month earlier after falling in December.
— Household incomes fell 0.6 percent, while seasonally adjusted household spending fell 1.6 percent from the month before.