As the nation's economy continued to reopen, amid weak global oil prices and a rise in domestic virus infections that could damp activity going forward, its key inflation gauge stayed at zero for a second month.

A slow economic recovery from last quarter's record slump is expected to weigh on prices with consumer demand having collapsed amid resurgent infections, which will in turn hit profits, jobs and business investment, analysts say.

The specter of a return to deflation is likely to keep the Bank of Japan under pressure to continue massive monetary stimulus and maintain ultra-low interest rates, to support government fiscal spending aimed at battling the health crisis.