Japanese household spending fell at a slower pace than expected in October, but the broader consumption trends remained soft in a challenge to policymakers' quest to engineer a solid recovery.

Consumer spending dropped 1.3 per cent in October from a year earlier, data from the internal affairs ministry showed on Friday, better the median market forecast for a 2.6 per cent decline. On a seasonally adjusted, month-on-month basis, spending increased 2.9 per cent, versus an expected 0.4 per cent uptick.

Economists attributed the underlying softness in consumption to rising prices and warm weather, which held consumers back from purchasing seasonal apparel.

The Bank of Japan had been expected to raise interest rates again as early as at this month's policy meeting, though in recent days many economists have cast doubt about such a move as the economy is yet to show signs of a sure-footed recovery.

Separate wage data also released on Friday showed Japan's base salary grew at the fastest pace in 32 years in October, boosting real wages after two months of decreases.

The BOJ ditched negative rates in March and raised short-term rates to 0.25 per cent in July on the view that Japan was progressing towards durably achieving its 2 per cent inflation target.

Just over half of economists polled by Reuters last month expect the BOJ to raise rates again on Dec. 19.

Reuters