This is because domestic private demand is likely to weaken further as corporate profits decline, firms' funding conditions deteriorate, and the employment and income conditions in the household sector worsen, and also because exports are expected to decrease sharply due to the further slowdown in overseas economies and the appreciation of the yen.
As for prices, the year-on-year rate of change in the consumer price index (CPI) for all items excluding fresh food had been around 0 percent from around 2003, but from around the end of 2007 it rose at a rapid pace, especially in petroleum products and food, due to the surge in commodity prices, and reached 2.4 percent this summer.