Japan says its core inflation rate excluding volatile food prices slipped to a meager 0.1 percent in May, though the unemployment rate was flat at 3.3 percent and household spending rose for the first time in over a year.
The data released Friday followed relatively weak indicators showing softening demand and slowing industrial production. Economists say the world's third-largest economy slowed or possibly contracted in the April-June quarter.
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Japan's central bank is pumping unprecedented sums of cash into the economy, seeking to push prices higher and spur inflation.
However, lower energy costs due to the fall in oil prices over the past year are slowing progress toward its 2 percent inflation goal.
That trend has helped small businesses and consumers, who increased spending by 4.8 percent in May.