Japan's economy grew 0.4% in the April-June quarter from the previous three months, faster than first estimated, according to revised figures released by the Cabinet Office on September 8, Yomiuri Shimbun reported on September 9.

The revision, equivalent to annualised growth of 1.4% against the preliminary reading of 1.1%, extends Japan's run of expansion to a third straight quarter. It also exposes the weak spot in the recovery: household spending, which accounts for more than half of gross domestic product, is barely moving even as businesses face renewed cost pressure from imported energy and food.

Private consumption was revised to a gain of 0.01% from the preliminary estimate of a 0.02% contraction, after vehicle shipments came in better than assumed. The level remains close to flat.

Capital investment, which makes up just under a fifth of GDP, fell 0.9% rather than the 1.2% initially reported. The upgrade followed the release of the Ministry of Finance corporate statistics survey, which pointed to stronger spending on cars and semiconductor manufacturing equipment. A steep drop in research and development outlays left capex negative for a second consecutive quarter.

Attention has shifted to the risk that deteriorating conditions in the Middle East revive inflation and drag on output. A survey by Teikoku Databank covering 195 major food companies found that 4,923 items are being repriced in September, with an average increase of 11%. The number of items is around three times the total for the same month a year earlier.

Price rises have already spread through petroleum-linked household goods. Some economists expect consumer price inflation, currently running in the 1% range, to accelerate to the 3% range by the end of the fiscal year.