As about 2 percent inflation has been firmly embedded in the social system and practices, those economies have been able to avoid deflation of a continued decline in prices and wages even when there was temporary downward pressure on prices and wages due to economic deterioration. Let me cite one unique example.
In wage negotiations between employees and employers in Sweden, a mechanism that the 2 percent inflation target set by the central bank serves as an important starting point for discussion to determine the wage increase rate was established as a common practice (Chart 15).