However, the level has not risen further (Chart 5). This is likely to be attributable to the first reason mentioned earlier -- that is, it has been taking time for wage increases to fully take hold. Third, firms' cautious price-setting stance also has been constraining a rise in inflation.
For the household sector as a whole, this upper-bound estimate of the effect is relatively modest. Even so, there are a number of reasons why the actual cash flow effect is likely to be even less than this. More importantly, the actual effect on household consumption is likely to be lower still. So let me step through the various reasons.