Japanese automobile production expanded sharply in May, according to Japan Automobile Manufacturers' Association (JAMA).

Automobile production in May 2012 was recorded at 781,340 units. Compared with the 489,759 units total recorded for the same month of the previous year, this is an increase of 291,581 units or 59.5%, and production increase on the same month of the previous year for eight consecutive months.

However, Japan's industrial output fell the most since the March 2011 earthquake and consumer prices declined, bolstering the case for extra stimulus to sustain the nation’s economic recovery.

"The lower output was mainly attributed to such industries as transport… chemicals and general machinery," the economy, trade and industry ministry said in a statement.

The seasonally adjusted industrial-production figure, released Friday by the Ministry of Economy, Trade and Industry, was worse than the 2.8% decrease predicted by economists. It follows a 0.2% decline in April.

The Bank of Japan has set an inflation goal of 1 percent. The Tokyo core consumer price index, released ahead of the nationwide data, fell 0.6 percent in June from a year earlier.