TOKYO (Reuters) - Around half of Japanese firms believe their country will have failed to rid itself of deflation a year from now, a Reuters poll shows, a sign that authorities are not gaining the traction they want as they battle an entrenched deflationary mindset.

Businessmen holding umbrellas wait for a traffic signal in front of a high-rise hotel and a building under construction, in Tokyo October 29, 2013. REUTERS/Issei Kato

Since the 1990s, deflation - sustained and broad declines in the prices of goods and services - has discouraged consumers from buying big or frequently as they seek better deals, and is seen as the root of decades of economic malaise.

The central bank embarked on unprecedented monetary easing three years ago, vowing to create inflation. Recent consumer price levels have been mostly flat in year-on-year terms, an improvement on declines but far from the 2 percent inflation target the Bank of Japan has set itself.

The question of whether Japan can decisively emerge from deflation is a matter of huge debate, and the Reuters Corporate Survey found many respondents worried by a steep slide in oil prices with some concerned that deflation has become too chronic a condition to change.

“The nation has been in deflation for such a long time with everyone of the mind that they want to buy things just that little bit cheaper,” wrote a manager at a machinery maker.

The survey, conducted Jan. 5-15, found that 48 percent of companies expect Japan to be still be in deflation in a year’s time, saying they could see no escape for the foreseeable future.

Less consumer demand due to a shrinking and aging population, long-term economic uncertainty and low wage growth were also cited as factors hampering inflation.

But half of the companies were not as pessimistic - an indication that authorities have made some progress.

Some 35 percent of firms see deflation gone in the latter half of the year, while 6 percent see it ending in the first half. Eleven percent believe that deflation has already ended.

The survey, conducted for Reuters by Nikkei Research, polled 514 big and medium-sized firms, with managers responding on condition of anonymity. Around 260 answered questions on deflation.

While last year’s tumble in global oil prices has been a big factor in derailing efforts to create inflation, most firms did not see it as a negative factor for their own business.

Fifty-seven percent saw it having little overall impact while 35 percent saw it as having a positive effect on earnings due to drops in energy costs.

The poll also found that while many economists believe the central bank will implement new stimulus this year, companies continue to be almost evenly split on the merits of further action.

Fifty-one percent thought further stimulus was needed to bolster inflation expectations, while 49 percent were against, with many arguing it would have little effect. The results were little changed from October when the question was last asked.

“The results may make it harder to justify further monetary easing,” said Hidenobu Tokuda, senior economist at Mizuho Research Institute, who reviewed the survey data. He said many firms likely saw more easing as leading to a further weakening in the yen and driving up import costs.

The survey also showed most firms were wary about waves of M&A in industries worldwide. Asked if they felt a sense of crisis over the trend, 30 percent said they had a considerable sense of crisis while 48 percent said they had a slight sense of crisis.

But only 10 percent said they were interested in pursuing a merger or acquisition. Around 40 percent said they would consider business ties with other firms while 35 percent said they aimed not to become involved in M&A.