Wholesale prices in Japan rose 1.1 percent in May from the previous year, marking the highest rise in about 6 1/2 years, the Bank of Japan said in a preliminary report Thursday.

The reading suggests that deflationary pressure, which had once severely eroded business revenue bases, has been fizzing out in Japan.

The prices, measured by the central bank's corporate goods price index, registered 95.8 against the 2000 base of 100, marking the third straight month of year-on-year increase, the BOJ said.

The 1.1 percent gain was identical to the figure for October 1997 and the sharpest since the 1.4 percent rise in September 1997.

The latest reading followed a 0.2 percent increase in March and a 0.6 percent rise in April, the BOJ said. The index was up 0.1 percent from April.

The sharp year-on-year rise in May reflected a 12.8 percent gain in steel product prices, attributed to brisk demand from China and other Asian countries, and a 14.6 percent increase in nonferrous metal prices, which more than offset a 4.1 percent drop in electrical equipment prices and a 1.2 percent decline in precision instrument prices, the BOJ said.

Prices of electrical equipment, such as cell phones and digital home appliances, apparently plunged as a result of aggressive corporate efforts to cut costs and intensify sales campaigns.

In the reporting month, prices of petroleum and coal products rose 4.4 percent, chiefly due to recent surges in crude oil prices, the BOJ said.

Export prices in May fell 1.3 percent in yen terms from the year before but rose 3.5 percent from April.

Import prices surged 6.5 percent in May from a year earlier in yen terms and 4 percent from April.