TOKYO: Japan's core consumer prices fell 1.1 per cent in May from a year ago, the biggest slide on record amid deflation fears in Asia's biggest economy, the internal affairs ministry said on Friday.

The latest data were in line with expectations, matching the average market forecast, which ranged from falls of 1.3 to 0.8 per cent.

Core prices, which exclude those of volatile fresh food, fell for the third straight month after a 0.1 per cent drop in March – the first fall in 18 months.

"The fall of 1.1 per cent is the biggest decline since we began using the current method of statistics in January 1970," a ministry official told AFP.

Falling energy costs and weak domestic demand during the country's worst recession in decades were blamed in part for the sliding prices.

The core consumer price index for the Tokyo metropolitan area, considered a leading indicator for Japan's consumer prices, fell a preliminary 1.5 per cent in June, the ministry said.

The latest numbers are likely to stoke fears over a return to deflation in the world's number two economy, after Japanese wholesale prices sunk 5.4 per cent in May from a year ago, the biggest drop in more than 22 years.

Japan was stuck in a deflationary spiral for years after its economic bubble burst in the early 1990s, eroding corporate earnings and encouraging consumers to delay their spending in the hope that prices would fall further.

Economists generally believe, however, that the worst of the current recession is over for Japan, thanks to gradual improvement in exports and production.


- AFP/so