The Bank of Japan left its overall assessment of the economy unchanged in its monthly report released Monday, saying the economy is continuing a gradual recovery led by business investment.

"Japan's economy is recovering gradually, with corporate profits and business fixed investment continuing to increase," the central bank said in its Monthly Report of Recent Economic and Financial Developments for September.

The BOJ also said that while the recent surge in oil prices affected the cost of imports, prices for domestic goods remained stable.

"Import prices are rising, reflecting an increase in international commodity prices, such as crude oil prices, since April," it said. But prices of domestic wholesale goods remain mostly unchanged, due mainly to a decrease in prices of electric machinery, the central bank said.

Consumer prices remain weak because prices of imported products have declined, reflecting the yen's past appreciation, the bank said.

"Thus, prices overall are expected to be stable or somewhat weak," the BOJ report says.

Commenting on its decision last month to scrap the 18-month-old "zero-interest-rate" policy, the bank said funding costs for companies are increasing, albeit gradually.

"In this financial environment, there seem to be no substantial changes in the lending attitude of financial institutions or an easing of corporate financial conditions," it said.

On its assessment of consumer spending, the September report uses the same wording it used last month. "The recovery in private consumption continues to be weak as a whole" due to a lack of notable improvements in employment and income conditions, it said.

The central bank's report also said public investment will decrease, but that net exports are expected to continue a gradual rise, reflecting the growth of overseas economies.