Japan's trade deficit widened to beyond the 1 trillion yen mark for the first time since January, coming in at 1.1 trillion yen ($7.1 billion).

Oil prices remained high, pushing up Japan's energy import bill as the Iran war drags on. Japan meets over 87% of its energy needs via imports, according to the International Energy Agency.

Petroleum imports jumped 58.7% by value. Most notably, petroleum imports from the U.S. skyrocketed 1,026% year on year.

This could be because Tokyo has been replacing oil imports from the Middle East with American supplies, but paying a premium for them, Marcel Theliant, head of Asia-Pacific at Capital Economics, wrote in a note after the data release.

He noted Japan's average oil import price was $103 per barrel in August, which was above the average $94 for Brent in August.

"Japan has replaced crude oil imports from the Middle East with imports from the US in recent months, but the average price of the latter was $110 [per barrel] last month," he added.

Japan is therefore still paying a premium to secure sufficient crude oil supplies from sources outside of the Middle East, though the government's price caps on refined petroleum products means that this cost is largely borne by the government rather than households and firms.

Export growth beat expectations in August, though it marked a slowdown for the first time since February.

Shipments from Japan grew 19.3% year on year in August, compared to the 18.2% expected by economists polled by Reuters. Exports of semiconductor equipment accelerated to a 52.3% rise by value, up from the 49.2% seen last month.

In terms of destinations, shipments to mainland China — Japan's largest trading partner — rose 20.6%, while exports to the U.S. climbed 24.9%.

Import growth came in stronger than expected in August, rising 28% against the 26.3% forecast in the Reuters poll.

The Bank of Japan meets later this week and is widely expected to hike rates as inflation in the country climbs.

— This is breaking news, please check back for updates.