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Consumer prices in Tokyo fell a record 0.9 percent in fiscal 2000 from the year before for the second straight year of decline, reaffirming that the economy is experiencing deflation, the government said Friday.

It is the first time that prices have fallen for two years in a row since 1971, when the government started to compile the statistics under the current method. Prices fell 0.6 percent in fiscal 1999.

Prices in March for Tokyo’s 23 wards — a leading indicator of price trends for the rest of the nation — also fell by a record 0.9 percent from a year earlier, down for a record 19th consecutive month, the Public Management, Home Affairs, Posts and Telecommunications Ministry said in a preliminary report.

The Tokyo consumer price index came to 100.6 in fiscal 2000, against the 1995 base of 100. In March, the index stood at 100.

The CPI data have become a key indicator for the economy following the government’s declaration on March 16 that the domestic economy is in a state of mild deflation.

As an emergency measure, the Bank of Japan decided March 19 to adopt quantitative monetary easing by pumping up the money supply. The BOJ will continue the policy until the year-on-year change in the CPI stabilizes above zero, it said.

Lower prices normally benefit consumers, but a prolonged fall would eventually hurt the economy by leading to a vicious deflationary spiral of falling corporate earnings and economic activities.

A ministry official said the fall of 0.9 percent in fiscal 2000 can be largely attributed to falls in the costs of housing rents, perishables, hamburgers and telephone charges.

In fiscal 2000, consumer prices — excluding volatile prices of perishables in Tokyo — fell a record 0.8 percent from 1999, for the second straight year of decline, with the CPI standing at 100.8.

In March, such prices fell 1.1 percent for the 18th consecutive month of decline.

Meanwhile, nationwide consumer prices in February fell 0.1 percent from a year earlier, a turnaround from a 0.1 percent gain in January, with the CPI standing at 101.2.

Excluding prices of perishables, nationwide consumer prices fell 0.6 percent from a year before, down for the 17th month in a row.

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