(Corrects month of data to February in first paragraph)
* Feb nationwide core CPI +1.3 pct yr/yr vs f'cast +1.3 pct
* Job market firms up, consumption hit by snowstorms
* Policymakers, analysts see slump after tax hike short-lived
By Tetsushi Kajimoto and Stanley White
TOKYO, March 28 (Reuters) - Japan's core consumer prices rose for a ninth straight month in February from a year earlier and labour demand improved - further evidence the economy is making headway against years of deflation and stagnation.
Ministry of Finance data showed household spending and retail sales weakened in February as snowstorms across Japan kept many consumers at home, but there are already signs that sales are accelerating this month as shoppers rush to beat a sales tax hike on April 1.
The dip in consumer spending may be disappointing to some, but continued tightness in the labour market could bolster expectations that the economy can weather the sales tax rise to 8 percent from 5 percent, and rebound after a temporary slump in the April-June quarter.
"The gradual increase in prices is consistent with a narrowing in the negative output gap," said Hiroaki Muto, senior economist at Sumitomo Mitsui Asset Management. (A negative output gap shows the economy is performing below full capacity.)
"The employment situation will also continue to put some mild upward pressure on prices. Consumer spending came in weak, but it will rebound next month."
The 1.3 percent annual gain in the core consumer price index, which includes oil products but excludes volatile fresh food prices, matched the median estimate in a Reuters poll.
The gain followed a 1.3 percent rise in January and December, which was the quickest since the 1.9 percent seen in October 2008.
The narrower inflation index, which excludes food and energy prices and is similar to the core index used in the United States, rose 0.8 percent in the year to February.
That matched a high last hit in April 1998 - a sign Japan is pulling further away from deflation.
Japan's consumer inflation has accelerated in the past several months since turning positive last June, with the Bank of Japan's aggressive monetary easing driving down the yen. Analysts believe inflation may slow in coming months as the weak yen's tendency to drive up import prices fades away.
Given this trend, many economists doubt that the central bank can achieve its aim of hitting a 2 percent inflation target in about a year, due to the persistent output gap and companies' reluctance to significantly increase capital spending and raise wages.