As economic recovery continues and the inflation rate steadily increases at a moderate pace, the frequency of price adjustments increases, and thereby, the slope of the Phillips curve will likely steepen gradually. In this regard, the sharp increase in imported prices and the consumption tax hike appear to have provided opportunities for firms to raise their sales prices collectively.
Some firms have begun to amend their past price-setting behavior. They have managed to continue increasing demand – even with higher sales prices – by offering higher value-added or innovative goods and services. An increase in the number of such firms may promote further steepening of the Phillips curve.