Some firms have started to cut back their services in response to a rise in labor costs in real terms due to wage increases and a reduction in hours worked, instead of raising prices of their goods and services. This is another example of the persistent deflationary mindset. It is not easy to dispel this mindset.
That said, the environment surrounding wages and inflation has been improving steadily, albeit at a moderate pace. It is important to ensure that this positive trend continues going forward. Medium- to long-term inflation expectations -- that is, people's perception of future price developments -- are a crucial factor that determines the inflation rate from a relatively long-term perspective.