Japanese consumer prices fell again in October, indicating that deflation show no signs of abating.
However, when the price of fresh vegetables are included, consumer prices rose from a year earlier for the first time in over five years.
Figures show the core nationwide consumer price index (CPI), which excludes volatile prices of fresh food, fell 0.1 percent in October from 2003. Economists had expected a fall of 0.2 percent.
Deflation has plagued the world's second-largest economy for over five years, but the pace of price declines has eased as the economy recovered over the last two years.
The core index was unchanged from September on a seasonally adjusted basis, the Ministry of Internal Affairs and Communications said.
Consumer price movements are closely watched as the central bank has vowed to stick to its present monetary policy until year-on-year changes in core nationwide CPI stablise above zero.
"As a trend deflationary pressures are easing, but it won't be until 2006 that deflation will come to an end," said Yoshimasa Maruyama, a senior economist at Mizuho Research Institute.
With the improvement, markets have been looking for clues on when and how the BOJ might tighten policy, either by reducing the excess funds it pumps into the financial system or eventually through raising interest rates.
Many analysts expect the BOJ to keep what is called its
"quantitative easing" framework of flooding the markets with
liquidity until late 2005 or 2006.