Sales tax hike dents Japanese economy

Japan's nascent economic recovery stumbled in April with data Friday showing last month's sales tax rise punctured household spending, as the IMF called on Tokyo to press on with reforms aimed at ending decades of stagnation.

The 13.3 percent dive in spending, which followed a similar dip in retail sales, came as separate figures showed inflation surging and factory output slipping. The news will give the Bank of Japan a headache as it looks to kickstart growth and fend off deflation but keep price rises under control.

While the bank's monetary easing programme unveiled last year has had an impressive impact on the Japanese economy, BoJ policymakers have come under pressure in recent months to extend it as growth shows signs of levelling off.

Governor Haruhiko Kuroda has repeatedly said he is ready to expand the stimulus if necessary but the bank has so far held off any such move, saying it would assess the impact of the sales tax rise, according to AFP.