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The key gauge of consumer prices in Japan fell 0.1 percent in 2004, marking a fifth straight yearly decline and underscoring that the economy is still beset by deflation, the government said Friday.

The nationwide consumer price index, excluding volatile prices of perishable foods, came to 97.9 in 2004 against the 2000 base of 100, the Internal Affairs and Communications Ministry said in a preliminary report.

The margin of decline was smaller than that for 2003, when the index dipped 0.3 percent. In 2002, the index dropped 0.9 percent, the steepest fall since comparable data became available in 1971.

The latest development is thus viewed as a sign that the economy’s deflationary pressures are easing.

Yet a ministry official said it is unclear whether this trend will continue, with the shrinkage having resulted primarily from one-time factors, including oil price spikes.

Meanwhile, the core CPI for Tokyo’s 23 wards, seen as the leading indicator of prices nationwide, stood at 96.4 in January, down 0.5 percent from a year earlier and marking a 64th consecutive month of decline, the ministry said.

The ministry official said that, given the margin of Tokyo CPI declines in January, attributed partly to reduced fixed-phone and other communication costs, it is likely that year-on-year price falls will continue for some time.

Some economists said the nationwide CPI is likely to flatten out or could even log an increase in 2005 because prices of raw materials, including oil, are expected to remain high.

“The upswing in commodity prices has led to price hikes in intermediate materials, generating cost-pushing effects or inflationary pressure,” said Hitoshi Asaoka, an economist at Mitsubishi Research Institute Inc. “But what really matters is whether salaries will rise or not.”

According to the ministry, the 2004 nationwide CPI slid 3.3 percent for furniture and household items, 1.4 percent for education and entertainment costs, and 0.2 percent for telecommunications, and for clothing and footwear.

By item, sharp price falls were recorded for durable consumer goods, with the average price of a laptop computer down 28.5 percent and that of a desktop computer down 27.2 percent. The average price of a video game was down 20.3 percent.

By contrast, regular oil prices rose 6.3 percent, as global oil demand grew amid geopolitical uncertainty. The average price of fresh vegetables was up 5.3 percent because of crop damage from several typhoons last year.

Rice prices jumped 9.7 percent, with a poor harvest in 2003 continuing to affect the supply-demand balance in the rice market.

In December alone, the nationwide CPI, excluding perishables, dropped 0.2 percent from a year earlier at 98.0 for the third straight monthly decline.

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