Key consumer prices in Tokyo fell a record 1.2 percent in 2001 from the year before, with deflation continuing into a third consecutive year for the first time since the war, the government said Friday in a preliminary report.

Deflation erodes corporate profits and has been blamed for pushing many Japanese companies toward bankruptcy.

Moreover, as consumer prices continue to decline, the government and the Bank of Japan are likely to face further pressure to take action to prop up prices.

The consumer price index for Tokyo's 23 wards -- a leading index of nationwide price movements -- came to 98.8 against the 2000 base of 100, according to the Public Management, Home Affairs, Posts and Telecommunications Ministry.

Including perishables, whose volatile prices rose 0.4 percent in the reporting year, the overall CPI sank 1.1 percent to 98.9, also marking a record third successive fall, the ministry said.

Heizo Takenaka, minister in charge of economic and fiscal policy, downplayed the significance of these latest figures.

"It is not true to say all price figures are moving in a downward direction," he said. "We can prevent the Japanese economy from falling into a deflationary spiral because the government has compiled a supplementary budget for the current fiscal year."

The CPI decline in 2001 was attributed chiefly to a decline of 1.6 percent in housing rents, of 22.9 percent in personal computer and other learning and entertainment durable prices, 0.8 percent in restaurant bills, 6.3 percent in communications fees and of 2.1 percent in clothing prices.

The prices of both goods and services both logged record falls, with the former falling by 1.5 percent and the latter by 0.9 percent.

By contrast, health and medical fees gained 0.5 percent following the introduction in January of higher costs for patients. Education fees were also up 0.8 percent.

In December alone, the overall CPI shed 1.5 percent from a year earlier to 98.1, posting the largest decline since comparative data became available in 1971 and logging a record 28th successive monthly slide.

Excluding perishable foods, whose prices plummeted 12.5 percent, the key CPI dipped 1 percent to 98.5, falling for a record 27th straight month.

Compared with the previous month, the overall CPI edged down 0.1 percent, marking the fourth consecutive monthly drop. The key CPI remained flat, however, following three months of decline.

Prices of fresh vegetables logged a month-on-month decline of 3.2 percent, those of fresh fruits fell 3.3 percent and those of clothing fell 0.4 percent.

The prices of learning and entertainment services centering on overseas group tours jumped 1.4 percent.