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.