Japan's economy has fallen back into deflation for the first time in more than a year, new data for March shows. Analyst Takeshi Minami, chief economist of Norinchukin Research Institute said the price drops will accelerate. The Bank of Japan has forecast two years of deflation, which stalked the Japanese economy in the 1990s. "Deflation will be damaging to the economy.
Companies will have difficulty increasing profits, and their effective burden from borrowing money will increase," he said. "With job conditions worsening, consumption will remain weak. As such, downward pressure from weak demand on consumer prices will continue as a trend." Annual consumer inflation in Japan hit a decade high of 2.4% in July and August last year.