MNI BRIEF: Firm Wage- and Price-Setting Behaviour Spreads - BOJ

The Bank of Japan believes positive company wage and price setting behaviour is spreading gradually, according to the full text of the Outlook Report released on Wednesday.

“A quantitative analysis using time-series data shows that moves to reflect wages in selling prices have been spreading, albeit moderately,” the BOJ said. “It is important to determine whether the linkage between wages and prices would strengthen by continuously conducting qualitative analyses."

Many firms maintain the view they can now pass fluctuations in raw material costs on to selling prices, but “it is difficult to pass labour costs on to selling prices," the BOJ noted. Moves to raise prices to obtain the source of wage increases have spread gradually, mainly among face-to-face services for which demand has recovered, the Bank added.

It noted company comments in the Economy Watchers Survey show the number of firms that identified labor costs as a reason for price increases had increased slightly.