3 While the incoming spending data, elevated household savings, and progress on vaccinations point to a very strong modal outlook, there is greater than usual uncertainty about the economy’s path. For instance, the strength of domestic demand this year relative to next will depend on how quickly or slowly a large share of accumulated household savings is spent out.
With regard to prices, wholesale prices continue to fall and consumer prices (excluding the effects of institutional changes) have declined slightly below the previous year’s level. With respect to the factors affecting the outlook, the downward pressure on domestic prices induced by the decline in import prices including overseas commodity prices has already weakened.