Japanese Prime Minister Fumio Kishida did not rule out a return to deflation in the world's third-largest economy as domestic demand remains weak, Reuters reported.

The comment came hours after data showed consumer inflation in Tokyo hit a 42-year high in January, prompting the central bank to gradually abandon its soft monetary policy.

However, Kishida said high global commodity prices and a weak yen were the cause of inflation, not strong domestic demand.

Asked by an opposition lawmaker whether the Japanese economy has fully emerged from years of deflation, Kishida said that there is an ongoing state of no deflation, but it has not yet reached a stage where we can judge that a return to deflation is unlikely.

Policymakers are hopeful that this spring's wage increases will cushion the rising cost of living and boost consumer spending.

The government and the Bank of Japan have agreed to work closely together for economic growth coupled with structural wage increases and sustained and stable inflation targets, Kishida said, echoing his earlier remarks.