More than half of major firms responding to a recent survey said the government must implement both fiscal and monetary policies to combat deflation, the Cabinet Office said Monday.
A little more than 51 percent of the respondents said fiscal and monetary measures are necessary to stem price falls, while 27.8 percent said fiscal policies are more effective than monetary policies and 7.8 percent favored monetary steps, according to the survey.
Of respondents citing fiscal policy as the key to fight deflation, 44.4 percent said permanent corporate tax cuts would be the most effective measure.
Among monetary policy proponents, 33 percent said setting inflation targets would be the best way to halt deflation.
The survey was conducted in January on some 1,270 firms listed on the Tokyo, Osaka and Nagoya bourses, excluding financial and insurance companies.
Asked about desired price-level increases, 86.4 percent said they want up to a 2 percent nominal price rise.
About 60 percent of respondents supporting inflation measures said they want to see the value of their shareholdings and landholdings increase.
The respondents project the economy to grow a real 1 percent annually on average in the five years from April 1. Such growth would be the weakest since 1986, when comparative data was first recorded.
The projection underlines companies' concerns that deflation will not end in the near future.
Some 72.2 percent of respondents said recent share price falls have hurt their earnings in the form of one-time losses.
However, 19.9 percent said stock market weakness has had little effect on their earnings.