But from the previous month, sales fell from October, with price increases in daily necessities weighing on Japanese households as the nation's core consumer inflation rate hit a fresh 40-year high, indicating price hikes were broadening.

A recovery in private consumption, which makes up more than half of Japan's economy, is key to driving growth in the economy, which unexpectedly shrank in the third quarter.

Retail sales grew 2.6% from the year earlier but short of a median forecast of 3.7%. The pace of annual growth in sales, a barometer of private consumption, slowed from 4.4% in October and 4.8% in September.

On a seasonally adjusted basis, retail sales slipped 1.1% in November from the previous month, down for the first time in five months.

Data showed last week that visitor arrivals to Japan jumped to nearly 1 million in November, the first full month after the country scrapped COVID-19 curbs that effectively halted tourism for more than two years.

A government domestic travel subsidy campaign to help the pandemic-hit tourism industry, which started in mid-October, also encouraged people to spend on travel and travel goods.

Separate data showed Japan's jobless rate fell to 2.5% in November, in line with a forecast in a Reuters poll, and down from 2.6% in October.

The jobs-to-applicants ratio, a key gauge of job availability, was at 1.35, unchanged from October and holding at the highest level since March 2020.

Bank of Japan Governor Haruhiko Kuroda on Monday voiced hope that intensifying labour shortages would prod firms to raise wages, while he brushed aside the chance of a near-term exit from ultra-loose monetary policy.

A higher inflation rate could also prompt firms to shift towards wage increases. Canon Inc plans to raise its base salary for the first time in 20 years, the Nikkei business daily reported on its website on Monday.

Japan's economy unexpectedly shrank in the third quarter, as global recession risk, China's faltering economy, a weak yen and higher import costs hurt consumption and businesses.

The government last week revised up its growth forecast for the next fiscal year to 1.5%, from a 1.1 % expansion in the previous forecast from July.

(Reporting by Yoshifumi Takemoto and Kentaro Sugiyama; Writing by Kaori Kaneko; Editing by Christopher Cushing)

By Yoshifumi Takemoto and Kentaro Sugiyama