The economy shrank by an annual rate of 0.6 percent in the first quarter of 2018 as consumers kept their purse strings tight despite signs that paychecks are finally beginning to rise after decades of flat wages.
Cabinet Office data released Friday confirmed that a two-year run of economic growth had at least temporarily run aground, with household spending contracting by 0.1 percent in the first quarter of 2018, a downward revision from preliminary data which showed no change.
"The main factor behind the contracting consumption is due to surging prices earlier in the year, which appears to be only a temporary headwind," said Marcel Thieliant, a senior Japan economist with Capital Economics.