On the back of developments in the output gap and inflation expectations, the year-on-year rate of increase in the CPI (excluding fresh food and the direct effects of the consumption tax hikes) is likely to be at around the current level for the time being, subsequently accelerate gradually, and reach around 2 percent – the price stability target – in or around fiscal 2015.
This outlook for prices has not changed from the one in the April 2014 Outlook Report. In terms of the median of the board members’ forecasts of the year-on-year rate of increase in the CPI excluding fresh food, this was 1.2 percent in fiscal 2014, 1.7 percent in fiscal 2015, and 2.1 percent in fiscal 2016 (Chart 10).