UPDATE 2-Japan halfway to inflation target but wages remain key
* Nov core CPI up 1.2 pct yr/yr vs forecast 1.1 pct rise
* Analysts sceptical if inflation to accelerate; wages key
* Factory output up 0.1 pct in Nov vs forecast 0.4 pct rise
* Job availability hits 6-year high, retail sales jump
* Overall cash earnings up for first time in 5 months in Nov
TOKYO, Dec 27 (Reuters) - Japan passed the halfway mark towards its inflation goal last month as prices rose the most in five years, while regular wages halted 17 months of declines, underlining progress under Abenomics on two key fronts to revitalise the economy.
Factory output rose for a third straight month, retail sales jumped and job availability hit a six-year high, other data showed on Friday, adding to growing signs that the recovery in the world's No. 3 economy is gathering momentum.
Prime Minister Shinzo Abe, who took office a year ago, is leading a push to conquer years of growth-sapping deflation during which companies and households held off on spending on the assumption that prices would not rise.
Friday's data showed progress towards the central bank's target of 2 percent inflation by around 2015. But achieving that goal could prove challenging when prices lose support from a weak yen - which inflates import costs - in year-on-year comparisons next year.
Whether employers increase wages, which have barely risen for years, remains key, analysts say.
"Consumer prices show signs of being pushed up by the weak yen, so we're still looking at cost-push inflation," said Yasuo Yamamoto, senior economist at Mizuho Research Institute in Tokyo. "It remains to be seen how strongly wages will rise."
The core consumer price index, which includes oil products but excludes volatile costs of fresh food, rose 1.2 percent in November from a year earlier, government data showed. That was roughly in line with a median market forecast for a 1.1 percent increase.
It was the fastest pace of growth since a 1.9 percent increase in October 2008, when a spike in global commodity prices pushed up import costs.
And in a sign of broadening inflation, the so-called core-core inflation index - which excludes food and energy prices and is similar to the core index used in the United States - rose 0.6 percent in the year to November. That marked the second straight month of gains and the biggest increase since August 1998.
Factory output rose 0.1 percent in November, less than a median market forecast for a 0.4 percent increase, although manufacturers surveyed by the government expect production to rise in December and January.
SIGNS OF WAGE GAINS
The Bank of Japan launched an intense burst of monetary stimulus in April, pledging to accelerate inflation to 2 percent in roughly two years via aggressive asset purchases in a country mired in deflation.
Japan's economic growth slowed in the third quarter due to soft exports after outpacing its G7 counterparts in the first half of this year.
Analysts expect the economy to pick up again as consumers try to beat a sales tax hike in April next year, although they worry about the damage the higher tax could do to the economy in the latter half of next year.
The BOJ's governor, Haruhiko Kuroda, has repeatedly said the pain from the sales tax hike will be temporary and will not derail the path towards achieving the bank's 2 percent price target.
He has also said wages need to rise for the BOJ to achieve its price target and for household spending to sustain strength.
"For now, the BOJ is claiming victory," said Atsushi Mizuno, a former Bank of Japan board member and now vice-chairman of fixed income for Asia-Pacific at Credit Suisse.
"But next year, the BOJ needs to communicate more why 2 percent inflation will lead to sustainable economic growth - its more essential mandate than the 2 percent price stability target," he said.
In other data on Friday, wage earners' total cash earnings rose 0.5 percent year-on-year in November, up for the first time in five months in a sign that upward momentum for salaries is starting to pick up. Regular pay, which excludes overtime and special payments like bonuses, was flat, the first time it has stopped falling in 18 months.
In a sign of a tightening job market, the jobs-to-applicants ratio improved to 1.00 in November, meaning one job was available for each job seeker, from 0.98 in October.
This was the strongest demand for workers since the ratio was 1.01 in October 2007, as demand for real estate and other services led to labour shortages at some non-manufacturers.
Retail sales rose 4.0 percent in November from a year earlier, exceeding the median forecast for a 2.9 percent increase, partly due to demand ahead of a planned increase in the sales tax next year.
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