Confidence in the economy has boosted Japanese stocks recently

Core consumer price inflation (CPI), which excludes food, rose 0.5% in February compared to a year earlier.

Meanwhile, Japan's unemployment rate fell to 4.1% in February from 4.4%, its biggest drop on record.

Experts said the figures underlined hopes that healthy consumer spending will push up prices, leading to a rise in interest rates from almost zero.

"The jobless rate could fall below 4% in March or April, and that could prompt views that growing employment will further push up prices," Naoki Iizuka, chief economist at Dai-ichi Life Research Institute, said.

Improving fortunes

Japan's jobless figure was the lowest rate since 1998.

The Japanese economy has been making a steady recovery over the past year, boosting domestic demand and improving the outlook for exporters.

The Bank of Japan recently announced plans to tighten its longstanding 'ultra-loose' monetary policy, indicative of the economy's improving fortunes.

Further good news is expected when the country's quarterly Tankan business confidence survey is released on Monday - with the report expected to show its fourth improvement in a row.

Improvements in the world's number two economy and its upbeat outlook have pushed stocks on Tokyo's Nikkei to five year highs.

The rise in share prices has come despite a higher-than-expected fall of 1.7% in industrial production for February being announced on Thursday.

"Combined with other economic data we've seen recently, it's safe to say the Japanese economy is maintaining its upward trajectory," said Masaki Fukui, senior market economist at Mizuho Corporate Bank said.