Under its quantitative easing policy started in April 2013, the BOJ is attempting to pull Japan out of 15 years of grinding deflation to and accelerate consumer inflation to 2 percent through aggressive money printing.
Annual core consumer inflation, which excludes volatile food but includes oil costs, slowed to 0.5 percent in December from 0.7 percent in November. The BOJ blames the slowdown on oil price falls, and it expects inflation to accelerate as the economy recovers.
But structural factors may crimp inflation for longer than expected, according to research that private think tank Nikko Financial Intelligence released on Friday.
Roughly half of the 588 items measured by CPI have seen prices stay largely flat throughout the past 15 years, the research showed.
This contrasts with other major economies such as the United States, where many items saw prices rise by 2-3 percent.
PROLONGED BURDEN
This may be because price falls in Japan during 15 years of deflation have been very mild, suggesting a good number of firms have not finished cutting prices, according to the research.
"Japan didn't suffer a deflationary spiral of severe price falls because companies delayed price cuts. But this has prolonged the burden of deflation," said University of Tokyo professor Tsumu Watanabe, who headed the research.
Japan needs to see a boost in the number of CPI items that see price-rises of 2 percent, but this not happened despite the BOJ's radical stimulus, said Watanabe, known for his research on Japanese price trends.
"I don't think such a shift will happen in about a year from now. It will probably take longer," he said.
The BOJ argues that its price target will be met "around" the fiscal year that will begin April 1, a timeframe many analysts see as too ambitious.
(Reporting by Leika Kihara; Editing by Richard Borsuk)
