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Japan household spending down 4.6 per cent

dpa logodpa 30/09/2016

Slumping consumption remains a problem for Japan, with new figures showing household spending has dropped almost five per cent from the same period in 2015.

Japan's household spending has dropped 4.6 per cent year-on-year for the sixth straight month, showing slumping consumption remains one of the most pressing issues for the world's third-largest economy.

Household spending stood at 276,338 yen ($A3588) in August, the Ministry of Internal Affairs and Communications said on Friday.

Weak consumption has been seen especially since Prime Minister Shinzo Abe's government raised the country's sales tax to eight per cent from five per cent in April 2014, the first hike in 17 years.

The premier decided in June to put off a second hike scheduled for April 2017 until October 2019 as his government failed to revitalise long-term economic growth.

The ministry also reported on Friday that inflation-adjusted monthly wages grew 1.5 per cent in August from a year earlier for the first rise in two months.

Meanwhile, the country's consumer prices fell 0.5 per cent year-on-year in August, marking the sixth consecutive month of price decreases.

The figure shows the world's third-largest economy remains in deflation amid sluggish consumer spending and falling global energy prices, despite the country's recent monetary easing measures.

In August, the core consumer price index, which excludes fresh food, stood at 99.6 against a base of 100 for 2015.

The numbers are far off the two per-cent inflation target that the Bank of Japan pledged in April 2013 to achieve within two years.

The central bank led by its governor Haruhiko Kuroda then started an aggressive monetary easing campaign. But it has failed so far.

The bank decided in January to adopt negative interest rates to stimulate the economy.

The bank suggested this week it would deepen a key negative interest rate.

Such a move would be a "main policy tool", Kuroda said in a speech in Osaka on Monday.

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