Japan inflation seen slowing in Dec; exports, output seen rising

TOKYO (Reuters) - Japan's consumer inflation likely slowed for a fifth straight month in December due largely to falling oil prices, a Reuters poll showed, keeping the Bank of Japan under pressure to meet its ambitious 2 percent inflation target.

More optimistically, for an economy seeking to emerge from recession, factory output probably rebounded in December helped by the electronic parts and automobile sectors after an unexpected slip the previous month.

Annual export growth was also seen improving in December from November's levels, helped by a weak yen and stronger demand from the United States and some Asian nations.

"December data next week will be examined for evidence to see if the economy really hit the bottom and started picking up in the October-December quarter, as many people expect," said Yoshiki Shinke, chief economist at Dai-ichi Life Research Institute.

Whilst putting an unwanted dampener on inflation, the slump in crude oil prices should benefit consumer spending and reduce manufacturers' costs, Shinke said, unless the weak oil market destabilised other financial markets.

"Falling oil prices are generally positive for households and the economy, unless financial markets become volatile which leads to turmoil in emerging economies."

The core consumer price index (CPI), which excludes volatile fresh food but includes oil products, is expected to have risen 2.6 percent in December from a year earlier, the poll of 25 economists showed.

That would follow a 2.7 percent rise in November and a 2.9 percent increase in October.

Excluding the effects of the sales tax hike, consumer inflation was estimated at 0.6 percent in December, just over a quarter of the way to achieving the BOJ's 2 percent target.

The internal affairs ministry will announce CPI at 8:30 a.m. on Jan.30 (2330 GMT Jan. 29).

Earlier this week, the BOJ sharply cut its inflation forecast to 1.0 percent for the fiscal year starting in April from 1.7 percent projected three months ago. BOJ Governor Haruhiko Kuroda conceded it may take longer than expected to hit 2 percent inflation.

Japan's factory output will likely show a 1.3 percent gain in December from the previous month when it fell 0.5 percent.

The data will be released at 8:50 a.m. on Friday (2350 GMT, Jan. 29), shortly after core CPI.

Exports are expected to have risen 11.0 percent in December from a year ago, the poll showed, suggesting a moderate recovery in overseas demand.

"A slide in oil prices will curb import values, while exports are recovering, although at a moderate pace, and the trade deficit probably shrank for a third straight month compared with a year ago," an analyst at Shinkin Central Bank said in the survey.

Imports probably gained 2.3 percent last month, which would result in a trade deficit of 740.3 billion yen, down from November's 891.9 billion yen, but still the 30th consecutive monthly deficit.

Trade data will be released at 8:50 a.m. on Jan. 26 (2350 GMT, Dec. 25).

Unemployment was expected to have stayed unchanged at 3.5 percent in December, and the job availability ratio was also expected to have been steady in December at 1.12, meaning more than one job was available per job seeker, according to the poll.

Household spending was expected to show a 2.5 percent annual decline in December, falling for a ninth straight month, the poll showed.

Jobs related data and household spending will be released alongside core CPI data on Friday.

The world's third-largest economy is expected to expand an annualised 3.2 percent in October-December after two straight quarterly contractions, a separate poll taken earlier this month showed.

(Editing by Simon Cameron-Moore)