Technological progress such as digitalization in recent years also has partly contributed to encouraging firms' efforts to raise productivity. Thus, even amid the economic expansion, there is a combination of various factors that makes it difficult for wages and prices to rise. It has been taking time to resolve these factors and such downward pressure on prices may last longer than expected.
The second reason why price rises have been sluggish is that inflation expectations have not risen easily. Inflation expectations refer to the outlook for prices that firms and households assume in carrying out economic activity, or in other words, people's mindset toward prices. 5  Inflation expectations and the actual inflation rate affect each other.