Conversion of the deflationary mindset has been progressing steadily, which has influenced firms’ wage setting and pricing strategy. At annual wage negotiations between management and labor this spring, an increase in wages was demanded taking into account actual inflation, and the practice of rises in base pay returned for the first time in more than a decade.
Firms’ price-setting strategy has been shifting from a low-price strategy under deflation to that of raising sales prices while increasing value added. Moreover, some labor unions have decided to demand an about 2 percent increase in base pay for wage negotiations toward spring 2015.