The figure — the lowest since April 1993 when the rate hit 2.3 percent — comes as Japan has notched up eight straight quarters of economic growth, the longest positive run since the “bubble” boom days of the late 1980s.
Japan’s government and central bank are hoping for a “virtuous cycle”, with an export-led recovery boosting jobs and household income and thereby domestic demand, which accounts for roughly 60 percent of Japan’s economy.
However, the former economic powerhouse is still battling deflation fears, failing to achieve the 2.0-percent inflation rate target set by the central bank, which is thought crucial to boosting the economy.
Experts say boosting domestic demand is key to exiting deflation and it requires better salaries for workers and removing fears over the snowballing costs of social welfare in the rapidly ageing society.
The data offer some good news for Prime Minister Shinzo Abe, a day after he was forced into an embarrassing climbdown over a key plank of his economic policy linked to labour market reforms.