Industrial production rose just 0.2 percent in September from August, government data showed on Friday, much weaker than the 2.0 percent rise economists had expected.
Although manufacturers surveyed in the report forecast gains of 2.4 percent in October and 1.9 percent in November, output for the July-September quarter fell a net 0.3 percent from the previous quarter.
The figures, which follow a string of other soft economic data this week, dampened optimism about a sustained economic recovery, helping to send Tokyo stocks down by nearly 1 percent in morning trade.
The core consumer price index (CPI) for the Tokyo area, a leading indicator for nation-wide prices, was down 0.3 percent in October from a year earlier, compared with a consensus forecast of a 0.2 percent decline.
The nation-wide core CPI for September was down 0.1 percent from a year earlier, compared with an average forecast for a fall of 0.2 percent. Rises in gasoline costs moderated, a government official said.
Still, many economists maintained their view that consumer prices would begin rising in the October-December quarter after more than seven years of decline.
Other data released on Friday showed domestic consumption may not be as strong as previously thought, although an underlying improvement in the labour market was likely to underpin spending.