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Japan reports inflation, household spending soften in July

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    In this June 26, 2015 photo, a man shops at a supermarket in Tokyo. Japan's inflation rate and household spending slowed in July, according to data released …

TOKYO (AP) -- The backdrop to the wild drama in financial markets over the past few weeks is a less dramatic but more daunting reality: the deep-seated challenges for sustaining long-term growth, especially for aging economies like Japan's.

Japan released data Friday showing its economy has yet to escape the doldrums more than two years after Prime Minister Shinzo Abe launched an unprecedented effort to jolt the country out of its deflationary rut.

Core inflation excluding volatile food prices flat-lined at its lowest level in more than two years in July and household spending also slowed, the government reported.

Unemployment edged down to 3.3 percent and household incomes rose 5.4 percent in real terms, thanks largely to semi-annual bonus payments. Such trends are leading economists for forecast the economy will return to expansion after a 1.6 percent contraction in annual terms in April-June.

But the middling vital signs, and worries over China's ability to stoke its own growth, may raise pressure on the Bank of Japan to up its...


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