Japan economy stalls as incomes, spending languish

TOKYO (AP) — Japan reports its economy remained stalled in July, as wages fell further and household spending dropped, signaling continued weakness in the world's third-largest economy.

Data released Friday showed inflation remained flat, with the core consumer price index, excluding volatile fresh food prices, at 3.3 percent, same as a month earlier. Much of the increase stems from a 2 percentage point increase in the sales tax in April, which has since sapped much of the steam from Japan's recovery.

Real incomes fell 6.2 percent, as the unemployment rate edged higher, to 3.8 percent from 3.7 percent in June. Softness in the labor market would counter any moves toward higher wages that might help spur more consumer demand.

The government plans extra stimulus spending to counter lingering effects of the tax hike.