Firms' Recent Price-Setting Behavior for Services Prices in the Consumer Prices
November 13, 2024
OZAKI Tatsuya, YAGI Tomoyuki*, YOSHII Akihito
Research and Statistics Department
*Currently at the Monetary Affairs Department
Abstract
In the consumer prices for services, labor costs account for a high share of output prices. With the strengthening linkage between wages and prices, services prices are an important factor for increases in underlying CPI inflation. Services prices in Japan remained at around 0 percent on a year-on-year basis and extremely sticky. Through an analysis of firms' recent behavior, it is clear that their price-setting behavior has begun to change, as shown by a rapid increase in the rate of wage increases in the annual spring labor-management wage negotiations for two consecutive years and the "beginning-of-the-period price hikes" seen in many services items in spring 2024. Going forward, it is important to continue to examine from a broad perspective whether these changes in firms' price-setting behavior will spread further and whether underlying inflation will rise steadily.
Notice
The Bank of Japan Review Series is published by the Bank to explain recent economic and financial topics for a wide range of readers. This report, 2024-E-10, is a translation of the Japanese original, 2024-J-11, published in August 2024. Views expressed are those of the authors and do not necessarily reflect those of the Bank.
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