In other data, household spending for January fell 5.1 percent from the year before, versus expectations for a 4.1 percent decline and after declining 3.4 percent in the previous month.  "I see [the decline in household spending] as a sign that Japanese consumers have run out of growth and money," Robert Medd, partner at GMT Research, told CNBC.  "The sales tax hike has jacked up the cost of spending, while the amount of spending is the same, because the prices have gone up the actual things they consume has fallen. If you look at the pre-tax numbers, it is down 20 percent year-on year," he said.  Industrial output rose an annual 4.0 percent in the month, compared with forecasts for a 2.7 percent increase and after rising 0.8 percent in December.  Read MoreJapan Inc sees no need for 2 percent inflation or more easing  Japanese manufacturers were more upbeat about next month, however. They expect industrial output to rise 0.2 percent on month in February, above their previous forecast for a 1.8 percent decline, according to the Ministry of Economy, Trade and Industry.  Retail sales fell 2.0 percent in January, worse than expectations for a 1.3 percent decrease.  Meanwhile, the unemployment rate increased to 3.6 percent from 3.4 percent in the previous month. The jobs-to-applicants ratio remained unchanged at 1.14 - the highest level since March 1992.  Japan's economy has been on the backfoot ever since the government raised nationwide consumption tax to 8 percent from 5 percent last April, in a bid to reduce the country's massive debt.  The economy slipped into recession in the third quarter, contracting an annualized 1.6 percent after shrinking 7.3 percent in the second quarter.
Japan's consumer inflation eased in January for a sixth straight month increasing expectations that the Bank of Japan (BOJ) will have to undertake further stimulus measures to achieve its price target.