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The Japanese government cut its economic growth forecast for the current fiscal year, reflecting weaker-than-expected private consumption.

The move gives some food for thought for Prime Minister Fumio Kishida ahead of the ruling party's presidential election in Sep, and the Bank of Japan as it mulls a potential rate hike.

The government lowered its real growth projection for fiscal year 2024 to 0.9% from the previous estimate of 1.3%, the Cabinet Office said on Fri. The downward revision was due to weaker private spending, according to a cabinet office official.

In addition to ongoing inflation, various one-off factors are also contributing to softer spending, including production halts by some car companies earlier this year and lingering effects from the New Year's day earthquake, the official said.

Japan also raised its overall inflation forecast to 2.8% from 2.5% for this fiscal year, reflecting recent currency trends. The government now assumes the yen will remain around 158.8 per US dollar for the current fiscal year, much weaker than the previous view of 149.8 yen.

The Japanese currency was trading around a 38-year low for about a month, before rebounding last week after suspected government interventions.

While the weaker economic outlook was partly driven by one-off factors, it doesn't bode too well for Kishida as he faces the prospect of his party's leadership election in late Sep.