Japanese wholesale prices in April fell by 3.8% from a year ago, marking the biggest drop in nearly 22 years, new data show today amid growing concerns over deflation.

The drop, which represented the fourth month of declines year-on-year in a row was the steepest since June 1987 when wholesale prices also fell 3.8%, the Bank of Japan said in a preliminary report.

Annual wholesale inflation surged to more than 7% last August on the back of higher oil and material costs, but has since evaporated. The latest figures reinforce fears that Asia's biggest economy is heading for another bout of deflation.

Compared with the previous month, wholesale prices in April fell by 0.4%, the eighth month of declines in a row, the central bank said.

Japan, the world's second-largest economy, was stuck in a deflationary spiral for years after its asset price bubble burst in the early 1990s, prompting the central bank to slash interest rates to almost zero.

The Bank of Japan said earlier this month that the nation's core consumer prices, which exclude those of volatile fresh food, suffered the first year-on-year fall in 18 months in March.