For this reason, downward pressure on wages is likely to increase, in which case upward pressure on prices – including prices of services, which are affected by wages – will weaken. Considering the price-setting behavior of firms in a situation where competition with overseas firms is expected to increase, I cannot help but be cautious with regard to the outlook for prices.
In view of what I have described, I believe that the probability that the year-on-year rate of change in the CPI will leave negative territory during fiscal 2011 is not high and that it will take some time to attain conditions necessary to overcome deflation.