TOKYO (Kyodo) -- Japan's core consumer prices dipped 0.1 percent in March from a year ago with the pace of decline slowing further, providing relief to the Bank of Japan as it battles to stem coronavirus pandemic-induced price falls, government data showed Friday.
The nationwide core consumer price index, excluding volatile fresh food items, marked the eighth straight month of decline, dragged down by lower energy prices, according to the Ministry of Internal Affairs and Communications. In February, the core CPI was down 0.4 percent.
The pace of decline slowed in March due partly to a rise in prices of household appliances such as air conditioners and air purifiers as demand increased due to people spending more time at home during the pandemic.
In fiscal 2020 through March, the core CPI dropped 0.4 percent, the sharpest decline in a decade, as the pandemic sent crude oil prices lower and the government's domestic tourism subsidy program brought about significant cuts in accommodation fees.
The figure marked the first fall in four years, according to the ministry data. The BOJ had projected a core CPI decline of 0.5 percent for fiscal 2020, far from its 2 percent inflation target.
"Movements of crude oil prices sway the CPI, but other than that the underlying factor that prices are not on an upward trend remains the same," said Yuichi Kodama, chief economist at Meiji Yasuda Research Institute.
BOJ Governor Haruhiko Kuroda has brushed aside the possibility that Japan will return to deflation, pointing out that downward pressure on the CPI came largely from special factors including the "Go To Travel" subsidy program.
Still, accelerating inflation is a difficult task for the BOJ, which tweaked its monetary policy in March to prepare for protracted easing.
In March, a 4.8 percent fall in electricity, gas and water bills weighed heavily on the overall CPI, tracking weak crude oil prices with a delay. Electricity bills dropped 7.1 percent while city gas slumped 8.5 percent.
Kerosene prices were down 4.2 percent.
But gasoline prices turned positive for the first time in a year, up 0.9 percent, as crude oil prices have been rising on hopes for global economic recovery as vaccinations against COVID-19 progress.
Accommodation fees were flat from a year ago following sharp year-on-year falls in recent months. A ministry official said some recovery was seen in travel demand after the lifting of a state of emergency over the pandemic for urban areas such as Osaka and Fukuoka on March 1.
In fiscal 2020, accommodation fees tumbled 16.9 percent and kerosene prices plunged 12.6 percent. Among other major decliners, fees for private kindergartens dived 88.5 percent in response to the government's move to make preschool education free, the data showed.
The price outlook remains uncertain as a resurgence in coronavirus cases has led to a government plan to impose yet another state of emergency for populous areas with the rescheduled Tokyo Olympics and Paralympics approaching this summer.
Major mobile operators in Japan started to offer lower data usage fees in March, taking heed of strong pressure from the administration of Prime Minister Yoshihide Suga.
The ministry official said the government is paying close attention to the impact of the fee cuts on the CPI that will start to appear in April data.
"The fee cuts are expected to drag down the CPI by 0.1 to 0.2 percentage point," Meiji Yasuda's Kodama said. "Price-cutting is unlikely to spread to other sectors so deflation is not in the offing."
So-called core-core consumer prices, excluding fresh food and energy items, rose 0.3 percent in March from a year earlier, up for the third straight month.