Japan's economic growth throttled back to a 2.6% annual rate in the second quarter from 3.8% in the preceding period as businesses scaled down investment. The latest growth in gross domestic product was much slower than expected and is likely to strengthen the hand of those opposing a planned sales tax increase. However, the Cabinet Office report also pointed to progress in the fight against deflation, with the GDP deflator easing 0.3% in the latest period from a year earlier for the smallest drop in nearly four years.

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