TOKYO - Japan recorded a current account deficit of 257.6 billion yen ($1.75 billion) in January, marking the first deficit in two years, according to preliminary data released by the Ministry of Finance on Monday.

The widening trade deficit driven by the timing of Chinese New Year was a key factor behind the shortfall, the data showed.

In breakdown, the trade deficit surged by 92.9 percent year-on-year to 2.9379 trillion yen. While exports rose 2.1 percent to 7.5022 trillion yen, imports grew at a faster pace, jumping 17.7 percent to 10.4401 trillion yen.

The earlier timing of Chinese New Year disrupted Japanese exports while boosting imports, as Chinese firms stockpiled inventory before the holiday.

ALSO READ: Japan PM Ishiba says high US tariffs made investment difficult

The services balance posted a deficit of 476.6 billion yen, though this was 30.4 percent smaller than a year earlier. The digital deficit, reflecting payments for web advertising and cloud services, expanded by 10 percent year-on-year.

In contrast, the travel balance reflecting spending by inbound tourists minus Japanese spending abroad posted a surplus of 708.3 billion yen, an 80 percent increase from the previous year.

The influx of tourists from Asia, particularly around Chinese New Year, contributed to this surge.

READ MORE: Japan govt okays $250 billion economic package to ease price pain

Meanwhile, the primary income balance, the net earnings from foreign investments, recorded a surplus of 3.6015 trillion yen, up 20.5 percent year-on-year that was driven by higher dividend payments from overseas subsidiaries, particularly in the automobile sector.