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Wholesale prices for fiscal 2004 rose 1.5 percent from a year earlier for the first increase since fiscal 1997.

The Bank of Japan said Wednesday that the prices, gauged by the BOJ’s corporate goods price index, came to 96.4 against the base of 100 for 2000. It attributed the rise to high oil and raw material prices.

If the one-time factor of the consumption tax increase in fiscal 1997 to 5 percent from 3 percent is excluded, the figure represents the first rise since fiscal 1991.

The rise in fiscal 2004 mainly resulted from high oil prices in line with surging prices of raw materials, including iron and steel, the BOJ said.

The margin of growth was the largest since fiscal 1989, when the government introduced the consumption tax.

But intensified price-cutting competition has pushed down the prices of products closer to general consumers, including personal computers, mobile phones and cars. Analysts say this could undermine optimism that Japan’s extended period of deflation might be coming to an end.

Economy unchanged

The government kept its overall assessment of the economy unchanged in its monthly report released Wednesday, despite an upward revision of personal spending due to brisk sales of clothing and heating equipment during the winter cold.

“The economy is recovering at a moderate pace, while some weak movements continue to be seen,” the Cabinet Office said in its monthly economic report for April.

Private consumption is “showing movements of a pickup,” compared with being “almost flat” in March, the report says, upgrading the assessment of personal spending for the first time since July.

A Cabinet Office official said private consumption has been supported by increasingly solid income levels.

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