BoJ says that if recent price rises in food prices were to persist, they could exert a sustained upward impact on overall consumer prices
Importance
Level 1
- Output gap has been on an improving trend, labour market conditions remain extremely tight, and wages are rising moderately.
- Firms continue to pass on higher wages. A mechanism in which wages and prices rise moderately in tandem has been taking hold.
- Increases in energy can affect underlying inflation in both directions.
- Need to pay attention to the possibility that upward price pressures from rising crude may have strengthened as firms become more proactive in hiking prices and wages.
- Given changes in firms' price-setting behaviour, prices may now be more susceptible to JPY depreciation.
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