Figures from Japan show that the country's economy edged back into deflation for the first time in more than a year in March, while the jobless rate jumped to a four-year high.
Analysts expect deflation to accelerate in coming months as the worst global recession in 60 years forces companies to cut prices, on top of sharp falls in commodity prices. The Bank of Japan has forecast two years of deflation.
Japan's core consumer price index, which excludes volatile prices of fresh fruit, vegetables and seafood but not oil prices, dipped 0.1% in March from a year earlier. It was the first annual decline since 2007.
Annual consumer inflation in Japan has retreated from a decade high of 2.4% in July and August last year, with much of the impetus coming from falling prices for oil and other commodities.
Japan's economic output slumped 3.2% in the fourth quarter, and the economy is expected to have contracted even more in the first quarter as companies feel the pain from the global financial crisis.
Meanwhile, the unemployment rate jumped to 4.8% in March from 4.4% in February - a rise of more than 350,000 people.
