Japanese inflation data offer fillip to Abe Japan is on track to win its war on deflation with the latest consumer price inflation figures showing the highest reading since the country slipped into deflation 15 years ago. Core consumer price index inflation, which excludes fresh food but includes energy, hit 0.9 per cent in October, up from 0.7 per cent the previous month and in line with economists" expectations. Excluding both fresh food and energy, it reached 0.3 per cent, the highest reading since 1998, indicating that rising energy costs alone were not the sole factor in inflationary pressure. The figures will be a fillip to Shinzo Abe, prime minister, and the Bank of Japan, suggesting the country is on track to hit the 2 per cent inflation target set almost a year ago and that monetary easing efforts are beginning to bear fruit. Separately industrial output also increased in October - by 0.5 per cent - for a second straight month. Since returning to power last December, Mr Abe has gone all out to overturn more than a decade of deflation through the "three arrows" of aggressive monetary easing, extra doses of fiscal stimulus and a host of measures to boost Japan's competitiveness. After the BoJ left its policy framework unchanged at a regular policy meeting last week, Haruhiko Kuroda, governor, said "we are making steady progress on the path to realising our goal." The bank has bought trillions of yen of government bonds from banks and other big holders, seeking to push them into riskier instruments such as loans, stocks and foreign assets. So far, prices have been rising in line with the BoJ's forecasts, thanks largely to the steep fall in the yen since the end of 2012, which has pushed up the cost of fuel and other imports. The headline CPI figure of 0.9 per cent was a reconfirmation that Japan was starting to put deflation behind it, said Junko Nishioka, chief Japan economist at RBS in Tokyo. "All in all, CPI data are developing fully in line with BOJ's view," he added. But many fear that the way ahead may be more difficult, as the effects of a weaker yen wear off. Three of the nine board members at the BoJ have expressed doubts that the target can be reached by the latter half of the 2015 fiscal year. Two of them - Takehiro Sato and Takahide Kiuchi, both former investment-bank economists - have raised particular concerns over the lack of basic wage increases, which they say are necessary to stoke a positive cycle of demand-based inflation. The October CPI rise will increase expectations of wage rises after the annual round of negotiations between unions and employers are concluded next spring, so that workers" salaries keep pace. There is also pressure to raise salaries given an increase in Japan's consumption tax from 5 to 8 per cent next April. Sayuri Shirai, another board member who objected to parts of the BoJ's growth and inflation forecasts in October, says she is concerned about the risk of dips in the economy caused by continuing weakness overseas, as well as flat household incomes. "If, as we anticipate, wages do not pick up in a meaningful manner and the negative impact from the consumption tax increase is larger than policy makers currently expect, it should be difficult for longer-term inflation expectations to rise substantially," said Kiichi Murashima, chief economist at Citi in Tokyo.