The key gauge of consumer prices in Japan dropped 0.2 percent in fiscal 2003, down for a sixth straight year, the government said Friday.
The nationwide consumer price index, excluding perishable food prices, came to 98.0 for the year that ended March 31, against the 2000 base of 100, the Public Management, Home Affairs, Posts and Telecommunications Ministry said in a preliminary report.
Although the figures show lingering deflation, the 0.2 percent dip was milder than the 0.8 percent falls in fiscal 2002 and 2001.
Including perishables, the nationwide CPI shrank 0.2 percent to 98.1 in fiscal 2003, down for a fifth straight year.
Private-sector economists said the data and a stronger-than-expected reading of the core CPI in Tokyo for April indicate that the economic recovery has steadily eased deflationary pressure in Japan.
The core CPI in Tokyo's 23 wards fell 0.1 percent in April from a year earlier to 97.4, marking a record 55th straight month of decline, the report says.
The market had forecast a 0.3 percent fall.
Masaaki Kanno, chief economist at J.P. Morgan Securities Asia Pte. Ltd., said he expects the CPI declines to move up to zero in the January-March quarter of 2005, effectively putting an end to deflation in Japan by the end of fiscal 2004.