Wages and prices  In considering channels more in line with economic activity, a wage increase – as well as the narrowing of the output gap – is indispensable for achieving the 2 percent price stability target (Chart 12).
At a meeting with business leaders in Gunma Prefecture on February 6, 2013, I stated that a significant wage increase of approximately 4 percent was consistent with achieving 2 percent inflation. However, considering the slowdown in the pace of increase in labor productivity in recent years, I came to realize that the wage increase needed might be lower – approximately 2 percent.