However, with the ongoing adjustments in economic activities, the balance between supply and demand in the domestic market is likely to exert downward pressure on prices. Furthermore, in addition to the declining trend of machinery prices caused by technological innovations, the decreases in the prices of goods and services reflecting deregulation and the streamlining of distribution channels will continue to restrain price developments.
Overall, prices are expected to be weak for the time being. Moreover, given the high degree of uncertainty regarding 1  This report is based on data and information available at the time of the Bank of Japan Monetary Policy Meeting held on August 13 and 14, 2001.