Japan's consumer inflation rose for the first time in 28 months in April, partly because the March 11 quake and tsunami and Arab political turmoil stoked higher fuel prices.
But analysts said the small jump does not spell an end to the deflation that has for years stalked the economy in a country where an ageing and shrinking population has increasingly held onto their purse strings.
Japan's core consumer price index, which excludes volatile fresh food prices, rose 0.6% in April from a year earlier, the first increase since December 2008, according to the internal affairs ministry.
The rise, which was in line with market expectations, was due largely to higher costs for oil products. Unrest in Libya and the Middle East drove up global oil prices, while Japan's March catastrophe damaged oil refineries and disrupted distribution of petrol, kerosene and other petroleum products.
'It's too early to think that Japan is close to the end of deflation,' an official at the ministry said as he briefed reporters on the data. He noted that the figures were also skewed by factors related to government education benefits. More than a year has passed since the subsidies were introduced, meaning they were no longer distorting year-on-year price changes.
Foodstuff prices, excluding fresh food, also rose, as the cost of flour and other commodities increased and because of supply disruptions due to the March 11 disaster.
Japan has been hobbled for years by deflation, a general drop in prices that saps economic activity, cuts into corporate profits and encourages consumers to defer spending in hopes of a further fall in prices in future.
Japan's government said last week the world's number three economy had plunged back into recession in January-March, because of the impact of the quake-tsunami and the world's worst nuclear crisis since Chernobyl.
Despite the widespread destruction, and the impact of the nuclear crisis on sectors from farming and fisheries to tourism most analysts expect the economy to begin growing gain later this year on reconstruction demand in the shattered northeast.
The trade and industry ministry said in a separate report today that Japan's retail sales in April fell 4.8% from a year earlier. This compared to a record fall of 8.3% in March.
