Upward pressure on costs stemming from inefficiency in logistics due to the prolonged situation surrounding Ukraine is also likely to induce such rises. Inflation rates are projected to subsequently fall to a level below 2 percent as the contribution of the rise in energy prices gradually wanes.
However, the underlying trend in inflation when excluding the effects of those prices is expected to rise mildly in positive territory amid a moderate recovery in Japan's economy and improvement in the output gap. Several factors may cause prices to deviate upward or downward from the baseline scenario presented in the July Outlook Report, one of which is developments in commodity prices.