Policymakers are worried high interest rates may hurt consumers

The Consumer Price Index (CPI) rose 0.1% in December from a year ago, preliminary government figures showed.

The data raised doubts that the Bank of Japan would lift interest rates from the current 0.25% level, analysts said.

Politicians have publicly urged the Bank to keep the rate unchanged so as not to choke an economic recovery.

'Rising steadily'

The climbing cost of food and utility bills were the main forces behind Japan's price growth, the Ministry of Internal Affairs said.

However, the decline in the price of crude oil meant that CPI was below the 0.2% level that had been expected by analysts.

The Bank of Japan (BOJ) looks at consumer prices for indications of whether or not Japan has fully emerged from years of deflation, and uses the data to help it decide on future interest rate policy.

Last week, policymakers voted 6-3 to keep rates where they were, a notable change in sentiment from their last meeting when they agreed unanimously to keep borrowing costs on hold.

"The CPI has been rising steadily at a slow pace since last year and I think overall it is stable," said finance minister Koji Omi.