It would be nice if these reports would quit popping up.

Japanese wholesale prices fell at their fastest rate since 2002, March figures showed on Monday, as weakening domestic demand on top of falling commodity prices led to worries about deflation.

With interest rates already nearly zero, analysts say the Bank of Japan has limited weapons to fight deflation in the country’s worst recession since World War II.

The Bank of Japan “has reached its limit in terms of conventional monetary policy moves,” said Norihiro Fujito, general manager at Mitsubishi UFJ Securities.

The government reported that wholesale prices fell 2.2 percent compared with a year ago. Analysts had forecast a drop of 1.8 percent, on average.

The latest figures follow a revised 1.6 percent fall in the year to February. It was the third month in a row of annual declines.

Analysts say it is inevitable that changes in consumer prices will soon turn negative after flat annual figures for the years to January and to February.

Overall final goods prices, which track prices of final products charged to businesses, fell 2.6 percent in March from a year earlier. Domestic final goods prices fell 1.7 percent.

Deflation like the flu tends to spread. It’s devilishly hard to stop once it gets a toe hold in a country and it quickly gets exported.

If it starts spreading from Japan to other Asian countries then we might be in for a far rougher go of things than we expect. 

more: here