As for wage setting, many firms have increased their base pay for two consecutive years. Moreover, their price-setting has also been shifting from a low-price strategy to raising sales prices while increasing value-added. Under deflation, firms could not raise sales prices against weak demand, and thus focused on lowering costs as much as possible – including personnel expenses – in order to secure profits.
However, as economic activity continues to improve, an increasing number of firms seem to be able to pass increased costs, including the rise in input prices and personnel expenses, on to sales prices. In particular, since the turn of the fiscal year in April, upward price revisions have been more widespread, which is something that has not been observed in recent years.