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The key gauge of consumer prices fell a record 0.9 percent in 2002 for the third straight year of decline, the government said Friday in a preliminary report.

The data show Japan has been deep in deflation with no clear signs of recovery in domestic demand.

Meanwhile, January’s core consumer price index in Tokyo fell 0.6 percent from a year earlier to 97.2, extending its falling streak to a record 40 months, the Ministry of Public Management, Home Affairs, Posts and Telecommunications said in the report.

Consumer prices in Tokyo are regarded as a leading indicator of prices nationwide.

The 2002 nationwide CPI, excluding volatile prices of perishable goods, came to 98.3 against the base of 100 for 2000.

The 0.9 percent fall is the largest on record, following a 0.8 percent decline in 2001 and a 0.4 percent decrease in 2000. The government began collecting data under the current system in 1971.

It was also the first time that the nationwide core CPI fell for three consecutive years.

The index including perishables fell 0.9 percent in 2002 to 98.4 for the fourth straight year of decline.

Prime Minister Junichiro Koizumi said the data confirms Japan is in a state of deflation.

Commenting on the largest-ever decline, Chief Cabinet Secretary Yasuo Fukuda said the government will step up efforts to promote structural reforms.

The issue of falling prices “is a major agenda that needs to be addressed by thoroughly changing (existing systems) and reorganizing industries,” Fukuda said during a regular news conference.

The steepest price fall, 27.4 percent, hit notebook personal computers, the next biggest, 25.2 percent came from desktop PCs.

Educational and entertainment durable goods prices, including those of PCs, dropped 2.2 percent in 2002, and prices of furniture and household durable goods prices, including those for refrigerators and air conditioners, fell 3.6 percent.

The cost of hamburgers, which once were the battle ground of an intense price war that was seen as symbolic of Japan’s deflationary spiral in general, rose 12.7 percent as many burger shops began serving up diversified offerings.

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