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Mar 26, 9:21 PM EDT

Japan inflation cools, household spending, incomes soften


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TOKYO (AP) -- Japan reported lackluster inflation and wages data for February that suggested Friday that its economic recovery remains in the doldrums.

Core inflation excluding volatile food prices was 2.0 percent in February, down from 2.2 percent in January. Excluding the impact of an April 2014 sales tax hike, inflation was flat.

Prime Minister Shinzo Abe has sought to spur growth through extreme monetary easing by the central bank that is meant to drive prices higher, prompting consumers and businesses to accelerate their spending.

But sluggish wage growth, coupled with the tax hike, has hurt consumers' purchasing power. Household spending fell 2.9 percent from a year earlier in February, while base wages slipped 1.9 percent, the 13th straight monthly decline.

The increase in the sales tax, to 8 percent from 5 percent, took much of the steam out of a recovery that gained momentum in 2013 but stalled after the tax hike, falling into a half-year contraction. The economy emerged from recession late last year but appears wobbly, based on data from the past several months.

In a positive sign from the latest data, unemployment fell to 3.5 percent in February from 3.6 percent the month before.

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