TOKYO--Japan's economy managed to notch a third straight quarter of growth, but weaker spending slowed the pace of expansion, potentially complicating matters for the central bank.

Real gross domestic product grew 0.3% during April-June from the previous quarter, preliminary government data showed Monday. That fell short of first-quarter growth of 0.5%--the same figure expected by economists surveyed by data provider Quick.

While the print indicates that Japan's economy has yet to lose significant momentum even as the Middle East crisis drives up oil prices and stokes inflation, the overall picture looks far from reassuring as geopolitical tensions persist.

Although various government measures have blunted the hit from higher oil costs, the economy could cool during the July-September period as war-driven price hikes squeeze household and corporate budgets further, economists say.

On an annualized basis, the Japanese economy grew 1.1% in the second quarter, also missing the consensus estimate.

External demand--exports minus imports--added 0.5 percentage point to growth, but economists noted that this reflected a drop in imports caused by falling Middle East energy purchases, rather than strength in outbound shipments.

Sluggish domestic demand is another worrying sign.

Private consumption was flat from the previous quarter, losing steam after a 0.5% gain in the previous three-month period. Capital expenditure dropped 1.2%, compared with the prior quarter's 1.0% decrease.

"The boost to consumption from policy measures is already fading, and inflation will increase in the second half as firms will pass on increased costs, deteriorating consumers' purchasing power," said Norihiro Yamaguchi, an economist at Oxford Economics.

The GDP data sharpens attention on whether the Bank of Japan will raise interest rates in September to counter price pressures, with policymakers increasingly worried that inflation could run above the 2% target.

Since the BOJ held its policy rate steady at 1% last month to gauge the effects of prior tightening, market expectations for a near-term rate hike have been rising, fueled in part by persistent yen weakness. The currency's softness despite joint U.S.-Japan intervention heightens price risks as the Iran crisis drags on.

Takeshi Minami of the Norinchukin Research Institute said the yen's weakness and surging crude oil will likely trigger widespread price increases in Japan in the autumn. If the U.S. and Iran fail to reach a resolution to defuse the crisis, global downside risks could intensify once again, the economist added.

Still, it's worth noting that Monday's data is preliminary and subject to revisions, and that markets are increasingly pricing in a BOJ move next month.

Krishna Bhimavarapu, an economist at State Street Investment Management, said the GDP results are "good enough" for the central bank to proceed cautiously with monetary tightening.

"We continue to expect a September hike, but see little in today's data to justify a faster normalization path beyond that."