Japanese deflation hits record level

Deflation in Japan has accelerated at its fastest pace since 1970, threatening the recovery of the world's second largest economy.

The 1.2% fall in consumer prices during December - the biggest drop since the CPI index began in 1970 - adds to Japan's economic woes after rating agency Standard & Poor's warned earlier this week it could cut the country's rating. According to the IMF, Japan's national debt is nearly twice that of its annual economic output. On Tuesday, the Bank of Japan kept interest rates on hold at 0.1% in an effort to overcome deflation.