Wholesale prices falls sharply in Japan
Wholesale prices in Japan dropped 2.2 percent in March, the steepest drop since May 2002, the Bank of Japan said.
The decline, attributed to a sharp drop in demand in a faltering economy, has triggered new fears of deflation in Japan, Kyodo News reported Tuesday.
Depressed final demand (contributed) to price declines, a bank official said.
Steel and iron prices have risen 10.6 percent on an annual basis, but have recently fallen, dropping 1.8 percent in March following a 1.5 percent drop in February.
Coal and petroleum prices have led the wholesale price decline, falling 34.6 percent from a year ago.
Deflationary forces are expected to strengthen gradually hereafter, and it appears that the wholesale price index is heading toward a year-on-year drop of as large as 6 percent, said chief economist Kyohei Morita at Barclays Capital Japan Ltd.
Economists fear deflation, as consumers hesitate to spend, assuming prices will continue to fall.