Furthermore, the 12-month increase in consumer prices has recently fallen almost to zero, excluding the effects of the rise in medical service charges caused by the medical insurance system reform of September 1997. With respect to factors affecting prices, the price decline phase of the second half of fiscal 1997 differed from that of around 1994-1995.
During the 1994-1995 period, downward pressure on the overall prices of import-competing domestic goods intensified owing to the rapid increase in the penetration ratio of imports, particularly in manufactured goods. This occurred against the background of the industrialization of Asian countries other than Japan and the continued appreciation of the yen.