Japan issued more sobering economic statistics on Friday. The terror attacks in the United States and fears of mad cow disease have made matters worse for the recession-bound economy.

For the first time since World War II, Japan saw deflation continue into a third consecutive year. The government says key consumer prices in Tokyo fell a record one-point-two percent this year from the year before. In December alone, the overall price index shed 1.5 percent from a year earlier.

Also on Friday, the government announced that the unemployment rate climbed to 5.5 percent in November, a record high for the third month in a row. The statistics show a significant increase in the number of middle-aged, full-time, male workers losing their jobs.

Chief government spokesman Yasuo Fukuda says rising unemployment is an unavoidable result of the government's structural reform policy.

Some of those who lost their jobs in recent months worked in the tourism industry, which has slumped in the wake of the September 11 terror attacks in the United States. Others were food service workers. Some restaurants went bust because diners stayed away amid reports of mad cow disease afflicting Japanese cattle.

According to some analysts, Japan is trying to soften the impact of the recession by allowing its currency to weaken, making Japanese products more competitive on the world market. But doing so hurts Japanese companies that import raw materials.

Making his first comments on the weakening yen, Prime Minister Junichiro Koizumi said its value should be decided by market forces. "I don't think we should be glad or sad. When the yen was stronger, people worried. When the yen becomes weak, people also get worried. We have to leave the situation of the yen up to the market," he said.

Currency traders previously have taken similar comments as a sign that Tokyo is comfortable with the weaker yen. The currency has fallen more than five percent against the dollar this month.