TOKYO (Kyodo) -- Japan's economy grew an annualized real 2.8 percent in the October-December period of 2024, marking the third straight quarter of expansion on robust corporate spending, but lackluster private consumption underscored the protracted effects of inflation, government data showed Monday.

Nominal gross domestic product, which shows the size of the economy in current prices, totaled 609.29 trillion yen ($4.01 trillion), surpassing the 600 trillion yen mark for the first time on a calendar year basis, according to the Cabinet Office.

In 2024, real GDP, which is adjusted for inflation and shows the total value of goods and services produced in a country, grew 0.1 percent, marking the fourth straight yearly gain.

But the pace of growth slowed sharply from 1.5 percent in 2023, as Japanese households struggled to cope with the rising cost of living without substantial gains in real wages.

The average market forecast was for an annualized real 1.32 percent expansion in the October-December quarter, according to a poll by the Japan Center for Economic Research.

On a quarterly basis, real GDP increased 0.7 percent from the previous July-September quarter, against the 0.33 percent rise projected by economists.

Capital investment increased 0.5 percent, marking a turnaround from a 0.1 percent drop in the July-September quarter, reflecting strong demand for chipmaking capacity and the need for new factory builds.

Another key component of domestic demand, private consumption, which makes up more than half of the economy, grew 0.1 percent, up for the third straight quarter.

Consumers ramped up spending on cars and durable goods such as air conditioners. The New Year's holidays were longer than the previous year, leading to increased spending on hotel stays. However, higher food prices curbed demand for rice and perishables.

"Private consumption turned out stronger than expected because we thought it would drop. But we need to be cautious about the outlook because wage growth, when adjusted for inflation, will likely be negative in the January-March quarter," said Saisuke Sakai, chief Japan economist at Mizuho Research & Technologies Ltd.

The forecast-beating GDP figures came as the minority government led by Prime Minister Shigeru Ishiba explores better ways to support inflation-hit households. The ruling and some opposition parties are in talks to boost people's incomes and reduce education costs shouldered by families with high school children.

The Bank of Japan, for its part, has kept expectations high that it will deliver another interest rate increase after its second hike in the most recent cycle in January. It is expected to do so if the economy and price developments are in line with its forecasts.

Japan has seen elevated inflation, one of the reasons why the BOJ has raised interest rates, with wage growth yet to clearly outpace it, dealing a blow to households.

The economy received a boost from strong exports, which rose 1.1 percent for the third straight quarter of gain, helped by increased spending by foreign tourists in Japan that is included in the exports calculation.

Imports, meanwhile, dropped for the first time in three quarters, down 2.1 percent.

"The GDP results are symbolic of weakness in domestic demand, which is evident in the fall in imports," said Toru Suehiro, chief economist at Daiwa Securities Co. "This rapid pace of GDP growth won't be sustained."

Public investment marked the second straight quarter of decline, down 0.3 percent.

Nominal GDP expanded 1.3 percent in the October-December quarter, or at an annualized rate of 5.1 percent.

Japan's economy is expected to continue growing in the January-March quarter, analysts say, projecting that capital investment will be solid even as uncertainty remains over the strength of consumption.

The outlook for external demand, a key factor for the export-reliant Japanese economy, looks increasingly murky, analysts say, as U.S. President Donald Trump, who returned to the White House in January, has been floating the threat of tariffs on U.S.-bound goods to address its trade imbalances.

"If the United States imposes tariffs on auto imports, it will hit the Japanese auto sector hard, which is a risk factor," Mizuho's Sakai said. "We cannot expect overseas demand to be robust when growth in the U.S. and Chinese economies is slowing."