Private consumption picked up 0.9 percent in the second quarter -individual spending accounts for more than a half of Japan's GDP.
Private consumption went up 3.7%, the fastest pace since 2013. Japan's economy grew for the sixth quarter in a row, continuing the longest period of growth in more than ten years, as strong domestic demand offset weakening exports.
Wages rose 0.7 per cent in April to June from the previous quarter, which was the biggest increase since July to September a year ago.
Compared with the previous quarter, the economy expanded 1 per cent, versus the median estimate for 0.6 per cent growth.
That was significantly higher than analysts had predicted and means Japan has now recorded six straight quarters of expansion.
In nominal terms, the country's GDP expanded 1.1 percent for an annualized increase of 4.6 percent. And overseas demand - which led the economy's growth until the previous quarter - is confronted with various risk factors, ranging from the ongoing confusion caused by the US administration of President Donald Trump, tensions in Northeast Asia over North Korea's ballistic missile and nuclear weapons programs and concerns over the collapse of bubbles in the Chinese economy. Behind the uncertainty over the course of consumer spending is stagnant growth in wages even as labor demand is the tightest in more than 40 years.
"The fact that the economy was able to grow this much without gains in exports shows our fundamentals are solid", said Mr Hiroshi Miyazaki, senior economist at Mitsubishi UFJ Morgan Stanley Securities.
According to data released by the government on Monday, real GDP surged by 1% in the June quarter, easily surpassing expectations for a smaller increase of 0.6%. That was the fastest growth in business investment since January-March 2014 as companies spent more on software and construction equipment.
"Although the headline numbers were good, consumption still lacked strength", Toshimitsu Motegi, minister for economic and fiscal policy minister, said at a press conference.
Stronger consumption at home is seen as key to maintaining momentum and achieving more progress towards the Bank of Japan's (BOJ's) still distant 2 per cent inflation goal. Net exports, shipments less imports, subtracted 0.3 percentage points from GDP.
Japan had been struggling with falling prices and sluggish growth for decades. Business spending advanced 2.4 per cent.