RTTNews - Core consumer prices in Japan fell at the fastest pace on record for the third straight month in July, the Cabinet Office said on Friday, falling 2.2 percent on year. That was in line with expectations following the 1.7 percent annual contraction in June for core CPI, which strips out the volatile prices for fresh food.

Core prices in Japan have now fallen for five straight months. Economists said the data shows Japan's economy is facing an increasing threat of deflation, as economic troubles linger and consumers spend less.

Overall nationwide inflation also matched expectations with a 2.2 percent annual decline after shedding 1.8 percent in the previous month.

Core prices for the Tokyo metropolitan area, considered a leading indicator for the national trends, were down 1.9 percent on year in August compared to forecasts for a 1.8 percent decline following a 1.7 percent fall in July.

Overall Tokyo inflation was down 1.6 percent on year versus expectations for a 1.8 percent contraction - the same as in the previous month.

Also on Friday, the unemployment rate in Japan came in at a seasonally adjusted 5.7 percent in July, the Ministry of Health, Labor and Welfare said on Friday, marking the highest rate on record. That was higher than analyst expectations for a 5.5 percent showing following the 5.4 percent increase in June. The job-to-applicant ratio was 0.42, or 42 jobs for every 100 seekers - also a record low figure.

Household spending was down 2.0 percent on month in July, while wage-earner household spending fell 1.6 percent compared to June. The propensity to consume came in at 67.4 percent.

The news couldn't have been much worse for the ruling Liberal Democratic Party, which is expected to face sound defeat in this weekend's election and fall out of power for the first time in 54 years.

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