Japan's core consumer inflation slowed in May and factory activity shrank in June, new figures show today.
The figures underline the growing stress on the economy and keep the central bank under pressure to expand its radical stimulus programme, possibly as early as next month.
The soft batch of data highlight the challenge the Bank of Japan faces in spurring inflation towards its 2% target, as trade frictions and slowing global growth threaten to derail the country's economic recovery.
Japan's core consumer price index, which includes oil products but excludes volatile fresh food costs, rose 0.8% in May from a year earlier, matching a median market forecast and slowing from a 0.9% gain in April.
A separate private survey today showed manufacturing activity contracted again in June as new orders fell at the fastest pace in three years, a sign slowing Chinese demand was taking a toll on Japan's export-reliant economy.
The Bank of Japan kept monetary policy steady earlier this week but signalled its readiness to ramp up stimulus.
It joined central banks across the world that are shifting towards more easing as the escalating US-China trade war raises fears of a global recession.
Japan's economy expanded by an annualised 2.1% in the first quarter but many analysts predict growth to slow in coming quarters as the US-China tariff row hurts business sentiment.
A scheduled sales tax hike in October may also curb consumption, they warn.
Any downturn in business spending could cast doubt on the Bank of Japan's argument that a sustained economic recovery will gradually prod firms to boost prices and wages, helping inflation accelerate.
Bank of Japan Governor Haruhiko Kuroda signalled yesterday his readiness to ramp up stimulus "without hesitation" if the economy loses momentum, fuelling market expectations of action as early as next month.