Shinzo Abe has hinted that he may delay increasing Japan’s consumption tax, saying the move would be “meaningless” if it inflicted too much damage on the country’s economy.

In an interview with the Financial Times, Japan’s prime minister said the planned tax increase from 8 per cent to 10 per cent was intended to help secure pension and health benefits for “the next generation”. But he added: “On the other hand, since we have an opportunity to end deflation, we should not lose this opportunity.”

The Japanese economy shrunk 7.1 per cent on an annualised basis between April and June after Mr Abe’s government raised consumption tax from 5 per cent to 8 per cent. A second rise has strong backing from the Bank of Japan, the finance ministry, big business and the International Monetary Fund, which want action to reduce the country’s mountainous debt. A postponement would require a change in the law.