That works out to an annualized contraction of 0.6 percent.
Analysts had expected a contraction, the first quarter pullback in two years. "Consumers will keep purse strings tight unless the pace of wage increases shows a clear acceleration", said SMBC Nikko Securities Chief Market Economist Yoshimasa Maruyama.
Japan will on Wednesday release preliminary Q1 numbers for gross domestic product, highlighting a modest day for Asia-Pacific economic activity.
External demand - or exports minus imports - added 0.1 percentage point to first-quarter GDP, as imports slowed more than exports.
The broader Topix index of all First Section issues on the Tokyo Stock Exchange, meanwhile, lost 2.24 points, or 0.12 percent, to 1,802.91.
Anwar Ibrahim: Former Malaysian opposition leader released after years in prison
Mahathir is the leader of the ruling alliance and Anwar's PKR won the majority of parliamentary seats in the group. Malaysia's king has agreed to pardon him, paving the way for his return to politics.
Japanese government officials expect the decline to be temporary.
Capital investment was down 0.1 percent.
The capital spending figures may presage data due on Thursday that is forecast to show core machinery orders, a leading indicator of capital expenditure, fell in March for the first time in three months.
That snaps a run of eight quarters of consecutive growth, the longest Japan has achieved since the boom days of the late 1980s.
The world's third-largest economy is shrinking again. The median estimate was for consumer spending to remain unchanged.