By Roland Buerk
BBC News, Tokyo
**Japan has been in deflation for 12 straight months, figures released by the government show.**Prices fell by 1.2% in February from a year earlier, threatening the country’s recovery from recession.
Japan’s economy has been periodically plagued by deflation since the “lost decade” of the 1990s, which led to years of stagnation.
The prospect that goods will become cheaper in the future makes consumers reluctant to buy today.
This leads to a vicious circle of falling company profits and wages.
Downward trend
The latest figures - where the core consumer price index fell by 1.2% - is not as bad as in previous months.
But the preliminary figures for Tokyo for March showed a steeper decline. The capital is seen as an indicator for nationwide trends.
Eyeing an election in the summer, the government is putting pressure on the Bank of Japan to further increase the money supply to tackle the problem.
The government has little room to spend more to counter deflation.
Its debt is already the largest in the industrialised world and rising.
On Wednesday parliament passed a record $1 trillion budget, much of it financed by borrowing.