Japan's corporate goods price index or the producer price index continued to fall in March, with the latest decline being the steepest in almost seven years, official data showed Monday.

The Bank of Japan said in a report that the corporate goods prices slipped 2.2% year-on-year in March, compared to a revised 1.6% decline in February. Economists expected the producer prices to fall 1.8%. The CGPI has now declined for the third consecutive month in March, with latest fall being the biggest since May 2002.

Month-on-month, producer prices dropped 0.2% in March, at a slower pace compared to a 0.5% drop in February, but in line with economists' expectations. The CGPI fell for the seventh consecutive month.

On an annual basis, producer prices of petroleum and coal products dipped 34.6%, followed by a 30.5% drop in prices of non-ferrous metals. Scrap and waste material prices plunged 63.4%.

On a monthly basis, the steepest fall in prices was for iron and steel, declining 1.8% in March and deducting 0.12 percentage points from the main index. Scrap and waste material prices slumped 12.4% and subtracted 0.05 percentage points.

Agriculture, forestry and fishery product prices dropped 1.4% and took away 0.03 percentage points. Processed foodstuffs and plastic products also made negative contributions to the index. At the same time, positive contributions came from non-ferrous metals and transportation equipment.

Meanwhile, the export price index rose 3.8% in March over the previous month, compared to a revised 0.6% increase in February. The import price index was up 3.4% on a monthly basis, after rising 2.2% in the previous month.

Export prices fell 7.5% compared to the previous year, slower than a 13.6% fall in February, while import prices dropped 19.6% compared to a 24.3% decline in the preceding month.

Last week, the Japanese Prime Minister announced a stimulus package worth 15.4 trillion yen or US$ 150 billion, to mitigate the effects of the global slowdown currently affecting the second largest economy. The package includes measures to create new jobs, financial incentives and health care measures.

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