Spending by Japan's wage-earning households in January rose 3.4 percent from a year earlier in real terms for the steepest increase in 16 months.

It is the biggest increase since the 4.1 percent rise posted in September 2002, according to the preliminary data released Friday by the Public Management, Home Affairs, Posts and Telecommunications Ministry.

It said spending rose for the third consecutive month, following increases of 0.4 percent in November and 1.1 percent in December, demonstrating a pickup in personal spending, a key driving force of economic growth.

The average monthly spending by wage earner households was 329,574 yen.

The average monthly income of such households rose 2.1 percent to 444,130 yen, and disposable income climbed 3.8 percent to 377,824 yen. Both rates of real-term increase are the largest since March 2002.

"We are not confident enough to say that household spending is on a full recovery path," a ministry official said. "But at least it can be said it has bottomed out."

The notable feature for January was a 5 percent rise in spending on eating out after a sharp fall in January last year. Spending on food rose 3.2 percent overall.

Spending on pork rose 9.2 percent as demand increased following an import ban on beef from the United States because of mad cow disease. Spending on beef dropped 15.7 percent.

The outbreak of avian flu in Japan and other parts of Asia led to a 2.6 percent decrease in spending on chicken.

Other items that helped push up overall household spending included educational expenses, which rose 10.1 percent, and housing-related spending, up 5.7 percent.