The key consumer price index continued its slide in September, dropping 2.3 percent from a year earlier, marking the seventh straight month of declines. But the fall slowed slightly after dropping at a record pace in August as the impact of dropping gasoline price began to wear off, government data showed Friday.
The core nationwide CPI, which excludes volatile fresh food prices, came to 100.2 against the base of 100 for 2005, the Internal Affairs and Communications Ministry said in a preliminary report.
Analysts said consumer attitudes favoring cheaper products have become deeply rooted as salaries have declined.
The headline reading compared with an average forecast of a 2.4 percent fall, according to a Kyodo News survey. The rate of price declines narrowed after hitting minus 2.4 percent the previous month, the sharpest drop since comparable data became available in 1971.
Overall energy costs fell 16.3 percent, with prices for petroleum products declining 24.5 percent. Gasoline prices dropped 25.1 percent, compared with a 31.4 percent slide in August.
Analysts say that as the impact of year-on-year gasoline price drops wears off, downward pressure from energy prices will weaken toward yearend.
"But we must be cautious about deflationary pressures outside the energy sector," said Hideo Kumano, chief economist at Dai-ichi Life Research Institute.
"Prospects that prices may go down wildly seem to be fading," Kumano said. "But consumers are expected to keep choosing cheaper products as long as their salaries don't rise."
In September, prices of nonperishable food fell 0.5 percent, with cooking oil sagging 16.1 percent, ketchup down 11.7 percent and seasonings falling 9.7 percent.
Including food prices, the September CPI marked a 2.2 percent fall to 100.4 for the eighth straight month of falls.
Excluding both food and energy prices — a measure closer to the core index used in the United States — the CPI fell 1.0 percent to 98.6 for the ninth consecutive month of declines.