This is because, although upward pressure of energy prices is likely to wane gradually, firms are likely to gradually shift their stance toward raising wages and prices with an improvement in the output gap, and inflation expectations are expected to accelerate moderately.
Looking at the medians of the Policy Board members' forecasts in the July 2017 Outlook Report, the year-on-year rate of change in the CPI (all items less fresh food) is projected to be 1.1 percent for fiscal 2017, 1.5 percent for fiscal 2018, and -- on a basis excluding the effects of the scheduled consumption tax hike -- 1.8 percent for fiscal 2019. II.