Japan's retail sales rose less than expected in April from a year earlier, suggesting that higher energy and food prices are putting consumers off their shopping.
The data reinforced market expectations that the Bank of Japan will not move interest rates for a while in light of the uncertain economic outlook.
"The latest data confirmed the Bank of Japan's view that the economic outlook is skewed towards the downside and that the BOJ will stand pat on interest rates for now," said Naoki Iizuka, chief economist at Mizuho Securities.
Sluggish retail sales growth may be a sign of weakness in consumption, which accounts for about 55 percent of the world's second-largest economy, analysts said.
"I think higher food and energy prices are starting to erode the purchasing power of the Japanese consumer, pushing down core retail sales," said Kiichi Murashima, director of economic and market analysis at Nikko Citigroup.
"It is premature to judge that private consumption in Q2 will be negative on a quarter-on-quarter basis. But we cannot rule out the possibility."
Japanese retail sales rose 0.1 percent in April from a year earlier, government data showed on Thursday, below economists' median forecast for a 0.5 percent. It was also down from a revised 1.0 percent increase in March.
Financial markets showed little reaction to the data.
Swap contracts on the BOJ's target rate showed investors saw a 50/50 chance of a rate hike by the end of year, up slightly from 45 percent late last week.
The retail sales data came before the government on Thursday nominated economics professor Kazuhito Ikeo as a member of the BOJ's rate-setting board, despite his previous rejection by opposition lawmakers, setting the stage for another political tussle in parliament.
Still, the central bank's policy stance would not be expected to change much if Ikeo were approved by parliament as he has been sceptical of the effect of monetary easing on boosting growth -- a stance similar to many economists at the central bank.
The BOJ left its key overnight call rate target at 0.5 percent at a board meeting last week, opting to take more time to see whether the clouds over the economy will clear.