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Japan's consumer prices fell 0.5 percent year-on-year in March, official data showed Friday, underlining the tough task of the government to pull the economy out of 15 years of deflation.
The reading, which excludes volatile prices of fresh food, was slightly worse than a forecast by economists surveyed by Dow Jones Newswires and the Nikkei, who estimated a drop of 0.4 percent on average.
Prime Minister Shinzo Abe has vowed to pull the world's third-largest economy out of deflation with active government spending, which he argues will kickstart the economy and eventually lead to higher pay for workers.
The Bank of Japan has unveiled massive monetary easing steps under new governor Haruhiko Kuroda. He has pledged to achieve a two percent inflation target in two years.
Deflation is bad for the economy because it encourages consumers to put off spending in the belief their intended purchases will be cheaper in the future, softening demand and hurting producers.
-- Dow Jones Newswires contributed to this story --