However, the increase is likely to be gradual – as evidenced by the presence of divergent behavior among firms, some of which are still setting lower sales prices in stiff competition.
This may suggest that it is a challenging task to change the price-setting behavior of firms, as demand has been decreasing amid the declining population, and it will take place gradually through firms’ greater efforts to develop innovative business models and their greater growth expectations. Developments in services prices will play an important role in achieving the 2 percent price stability target.