If the virtuous cycle of economic activity is sustained, a view that “around 2 percent inflation will continue with improvements in corporate profits, employment, and wages” will spread widely throughout the country, and a new inflation rate that the general public perceives as representing price stability will take hold.
In the latter half of 2014, the price rise that includes the consumption tax hike might have been perceived only as an increase in costs, or incited concern over inflation amid the delay in economic recovery, thereby leading to deterioration in sentiment. What Japan needs to achieve, however, is a sustainable, mild inflation with the virtuous cycle of economic activity operating.