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Japan's economy recovering but inflation, exports slow: gov't

This May 24, 2018 photo shows a number of vehicles parked for export at a port in Yokohama. (Kyodo)

TOKYO (Kyodo) -- Japan's economy is recovering moderately even though inflation and growth in exports have slowed, the government said Wednesday.

Consumer prices are "rising at a slower tempo," the Cabinet Office said in the August edition of its monthly economic report, reflecting a recent stall in price gains despite aggressive monetary easing by the Bank of Japan.

It also said exports are "pausing," a more pessimistic view than July when it said they were "picking up," and warned of risks including international trade disputes and financial market volatility.

Japan is particularly concerned about U.S. President Donald Trump's threats to place tariffs on auto imports, a significant source of income for the export-reliant Asian nation.

Despite these factors, the Cabinet Office maintained its headline assessment that the world's third-largest economy is "recovering at a moderate pace," citing solid private consumption and capital expenditure as well as improvement in the employment situation.

The report followed preliminary data earlier in the month that showed the Japanese economy grew an annualized real 1.9 percent in the April-June quarter, bouncing back from a 0.9 percent contraction in the January-March period thanks to an upswing in domestic demand.

Meanwhile, separate data has shown sentiment dented by flash floods caused by torrential rain in western Japan in July, just as gradual wage gains were beginning to convince households to loosen their purse strings.

That could further frustrate the BOJ's efforts to lift inflation to 2 percent, the level it considers congruent with steady economic growth, after more than five years of ultraloose policy to no avail.

Core consumer prices, excluding volatile fresh food, rose just 0.8 percent in July from a year earlier, the same pace as in June and only slightly faster than the preceding two months.

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