Inflation in December, excluding volatile prices of fresh food, rose from year-earlier levels to 2.5 percent, less than the 2.7 percent recorded in November, data from the internal affairs ministry showed.
Prices rose largely because the government raised sales tax from 5.0 percent to 8.0 percent on April 1, which drove up retail prices and put brakes on consumer spending.
Separate data from the ministry on Friday showed household spending in December fell a greater-than-expected 3.4 percent year-on-year.
Adjusted for the tax increase, the nationwide core consumer price index rose 0.5 percent from a year earlier in December.
Earlier this month the Bank of Japan slashed its inflation outlook as plunging oil prices dent efforts to slay years of deflation.
The central bank now expects inflation for the year starting in April to come in at 1.0 percent, well down from an earlier 1.7 percent forecast and the bank's ambitious two-percent inflation target.
Taking office in late 2012, Prime Minister Shinzo Abe launched a policy blitz dubbed Abenomics, which meshes government spending with massive monetary easing by the central bank and reforms to the highly regulated economy.