Japan has seen its fastest rise in core consumer prices in almost a decade as sky-rocketing energy costs help to lift Asia's largest economy out of years of deflation.
Meanwhile the jobless rate fell unexpectedly as household spending and industrial output dropped.
The details emerged from a raft of data for November that painted a mixed picture of the health of the Japanese economy.
Core consumer prices climbed 0.4% in November from a year earlier, the largest gain since March 1998, the government said.
Market forecasts had been for a rise of 0.3% after October's 0.1% gain, which snapped an eight-month losing streak.
Higher energy prices were largely behind the pick-up in inflation, which is likely to slow as global oil prices stabilise, said Mamoru Yamazaki, chief economist for RBS Securities in Tokyo.
Core consumer prices for the Tokyo area - a leading indicator released a month earlier than the nationwide index - rose 0.3% in December.
Despite the return to positive inflation, economists doubt the Bank of Japan will raise interest rates again until mid-2008 at the earliest given uncertainties about the health of the Japanese and global economies.
Japan's economy is gradually recovering from a slump stretching back more than a decade, but growth this year has fallen short of expectations amid a shaky global economy and a slump in the domestic housing market.
Small firms in particular are struggling at the moment against a backdrop of higher energy costs and borrowing costs.
On a brighter note, Japan's unemployment rate dropped to 3.8% in November from 4.0% the previous month, beating market expectations for no change.
Despite the low unemployment, wage growth remains sluggish due to demographic changes and corporate Japan's reluctance to raise salaries amid fierce competition with rivals in China and elsewhere.
That in turn has weighed on household spending, which fell unexpectedly by 0.6% in November from a year earlier, the first decline in four months, official data showed.
Industrial output meanwhile fell by 1.6% in November from the previous month. It was the first drop in two months, coming after a rise of 1.7% in October.
