Consumer prices, excluding food, fell 0.2% in January from a year earlier.
Japan has been battling deflation for years. It has hurt domestic demand as consumers tend to put off purchases in hope of a cheaper deal later on.
Japan’s new government has said that stoking consumer price growth is key to reviving Japan’s sluggish economy.
The hope is that if consumer prices start to rise again, then consumers may look at buying goods sooner rather than postpone their purchases, as they may have to pay more for products later on.
That is likely to help drive up domestic consumption and boost Japan’s economic growth.
Domestic demand has become even more important to Japan’s economy in recent times as its exports, one the biggest drivers of growth over the past decades, have been hurt by a slowdown in global demand.
Prime Minister Shinzo Abe, who won the recent general election on a platform of promises to revive Japan’s sluggish economy, has called upon Japan’s central bank to do more to fight deflation.
During his campaign he had even suggested that the central bank, the Bank of Japan, should print “unlimited yen” to help stoke consumer price growth.
The idea being that with more money pumped into the market, consumers will have more cash to spend and that will help up drive demand as well as prices.