The first is that prices have not responded smoothly to excess demand stemming from the economic expansion. Theoretically, when demand exceeds supply, there will be shortage of labor and products, leading to increases in wages and prices. As I explained earlier, such increases actually have been observed, mainly for wages, but the pace has been slow compared to that of economic improvement.
In particular, the rate of increase in scheduled cash earnings of regular employees has been sluggish, and it has been taking time for a rise in their wages to fully take hold. The year-on-year rate of increase in hourly wages of part-time employees, which are sensitive to developments in labor market conditions, has continued to mark relatively high growth of around 2.5 percent.