If firms' inflation expectations become higher, the pass-through of cost increases could accelerate further. Wages are expected to rise in line with improvement in economic conditions. However, uncertainty is high as to what extent wages will rise.
If the behavior and mindset based on the assumption that wages will not increase easily remain deeply entrenched, there is a risk that moves to increase wages will not strengthen as much as expected and prices will in turn be under downward pressure. At present, large firms in particular hold a stance of increasing wages at a rate exceeding the inflation rate.