Sayuri Shirai: Shifting toward a moderately inflationary economy in
Japan - overview of firms' and households' inflation expectations
Speech by Ms Sayuri Shirai, Member of the Policy Board of the Bank of Japan, at Bruegel,
Brussels, 4 March 2015; the European Central Bank, Frankfurt am Main, 6 March 2015, and
the Bank of England, London, 10 March 2015.
* * *
Accompanying charts can be found at the end of the speech or on the Bank of Japan's website
I. Introduction
It is a great honor to have this opportunity to speak to you today about Japan's current
monetary policy. With the aim of achieving its 2 percent price stability target, the Bank of
Japan (hereafter the Bank) adopted quantitative and qualitative monetary easing (QQE) in
April 2013. QQE was expanded further in October 2014. This was because of the potential
risk that a decline in the consumer price index (CPI) inflation rate - driven by somewhat
weak domestic demand following the consumption tax hike and a substantial decline in crude
oil prices - may have exerted downward pressure on inflation expectations, thereby
undermining the positive developments in wage negotiations and firms' price-setting
behavior. In my view, the QQE expansion was important to ensure a virtuous cycle from
income to spending. Thereafter, crude oil prices dropped further and inflation has continued
to decline, but domestic demand has continued its moderate recovery trend. Moreover, the
Bank believes that inflation expectations appear to be rising on the whole from a somewhat
long-term perspective. Nominal and real incomes are expected to rise, and thus the rate of
increase in the CPI is expected to become positive once drops in crude oil prices stall and
prices subsequently increase moderately.
Low inflation also prevails in Europe. In the euro area, the rate of increase in the Harmonized
Index of Consumer Prices (HICP) turned negative in December 2014 mainly as a result of
the decline in crude oil prices. Some indicators of inflation expectations have also decreased.
The European Central Bank (ECB) has undertaken additional unconventional monetary
easing measures in January 2015 similar to those adopted by the Bank. The common
features are (1) large-scale purchases of various financial assets (mainly sovereign bonds)
as a main pillar and (2) a long-term conditional lending facility, where the amount of lending
to financial institutions depends on the increased lending volume by those institutions to the
private sector (Chart 1). In this low-inflation environment, one of a central bank's main tasks
is avoiding deflation in Europe and conquering deflation in Japan. Bearing this in mind, I will
review the Bank's outlook for economic activity and prices over the past two years and
explain my opinions on the upside and downside risks with the latest baseline scenario. In
addition, I will discuss developments related to inflation expectations in Japan.
II. The bank's outlook for economic activity and prices and risk assessment
A. The bank's baseline scenario
The Bank presents quarterly forecasts on real GDP and core CPI (all items less fresh food),
prepared by the nine members of the Policy Board, on a year-on-year basis for the next three
years (currently, up to fiscal 2016). Chart 2 shows the median, minimum, and maximum
forecasts of the majority of policy board members for the selected four forecast points:
(1) April 2013 (the month when QQE was adopted); (2) April 2014 (a year after adoption);
(3) October 2014 (the latest month of the publication of the biannual Outlook for Economic
Activity and Prices); and (4) January 2015 (the latest forecast point). As the median forecast
is often regarded as mostly reflecting the Bank's baseline scenario, I will proceed with my
explanations on the Bank's baseline scenario based on that median.
If one reviews the Bank's medium-term forecasts on economic activity and prices, it is
evident that there were rather large downward revisions over that period (Chart 2). The same
is also true of my medium-term relatively cautious forecasts, which have been consistently
lower than the median for both real GDP growth and core CPI inflation since the introduction
of QQE in April 2013. It is natural for a central bank to revise its forecasts given changes in
assumptions with respect to domestic and external conditions. Nevertheless, since the
revisions have been large, I feel it necessary to provide a clear explanation for these
developments. Thus, I will provide my views in this area in the following sections.
B. Revisions of the bank's outlook for economic activity
Downward revisions on growth forecasts for fiscal 2014
In Chart 2, one feature that may attract your attention is the large revisions made on
economic growth for fiscal 2014 - from 1.4 percent in the April 2013 forecast point to minus
0.5 percent most recently. Four main reasons may be given here. First, the downward
revision took place mainly owing to the greater-than-expected decline in private spending
caused by the consumption tax hike in April 2014 as well as the weaker-than-expected
subsequent recovery pace. The declines in private consumption (especially durable goods)
and residential investment are attributable both to a reaction to the front-loaded increase
prior to the tax hike and to a decline in real (disposable) income, mainly associated with the
tax hike.
The adverse impact of the tax hike turned out to be greater than projected - perhaps
because it was difficult to grasp the structural changes in the economic and social structures
that occurred after the previous tax hike in 1997. Those changes included the following:
(1) an increase in the number of pensioners and a temporary cut in pension benefits in fiscal
2013-15 (owing to dissolution of the special level of pension benefits); and (2) a continued
decline and resultant low level of per-capita nominal income that is prevalent even after the
wage increase since fiscal 2014 (as a result of the growing number of nonregular workers
and the long spell of restrained wage growth for regular workers). In this regard, I have
repeatedly emphasized that the Bank should recognize the pace of improvement in the
employment and income situation as a downside risk. It is clear that this risk has materialized
and played a major role in the downward revision of the Bank's outlook. In other words, a
decline in domestic demand as a result of a real income drop (the Keynesian effect) appears
to have exceeded an increase in domestic demand driven by the improved sentiment toward
the sustainability of the fiscal balance and the social security system (the non-Keynesian
effect). In addition, bad weather conditions adversely affected private consumption in
JulyOctober 2014. Thereafter, however, private consumption started to recover gradually as the
adverse impact of the tax hike waned. Residential investment also appears to have more or
less bottomed out.
Second, the sharp depreciation of the yen brought only a limited gain in export volume, thus
failing to offset a substantial decline in domestic demand caused by the tax hike. The tepid
export performance was due to the following: (1) a shift to overseas production, which was
accelerated in the phase of the yen's sharp appreciation; (2) a loss in price competitiveness
in some manufacturing sectors; and (3) weak recovery of global demand. The limited growth
in export volume produced few benefits for manufacturing small and medium-sized
enterprises (SMEs), which generally operate as suppliers of parts and intermediate goods to
larger domestic manufacturing firms; the latter gained profits partly driven by the valuation
effect. Since the second half of 2014, meanwhile, the export volume has begun to rise
moderately, reflecting a gain in price competitiveness and the relatively strong economic
recovery in the United States.
Third, while the above two factors were the major reasons for the downward revisions,
business fixed investment also did not rise as much as projected. This was partly because
the end of support for some widely-used software programs and tightening of gas emission
regulations applied to construction machinery produced a front-loaded increase in purchases
of personal computers and construction machinery before April 2014; this was followed by a
subsequent decline in such purchases. Moreover, some firms postponed their plans to
expand business fixed investment owing to the greater-than-expected accumulated inventory
(especially consumer durable goods). Currently, however, investment continues to recover,
inventory stock has begun to fall, and industrial production has started to rise.
Fourth, the potential economic growth rate has trended downward historically, and it still
remains below 0.5 percent despite a moderate recent increase (Chart 3). This may be one of
the reasons that according to various opinion surveys, many households have not felt signs
of economic recovery. That could be contributing to the sluggish pace of domestic demand
recovery. The decrease in potential economic growth is considered to be the consequence of
demographics, a deceleration in total factor productivity (TFP) growth, and a decline in
capital stock (driven by delayed investment).
Moreover, the unemployment rate has already dropped to around 3 percent - a level closer
to the natural unemployment rate - and along with the decline in the working-age population,
the labor shortage is increasingly evident. The labor shortage has favorably contributed to
creation of new employment and nominal income growth; however, it has also incurred
constraints on economic growth by allowing mainly SMEs and firms in nonmetropolitan areas
to lose the opportunity to expand or continue their businesses. For example, owing to a
severe shortage of skilled workers and engineers, the construction sector was prevented
from adequately expanding the volume of their building construction starts in response to the
front-loaded order placement of public investment in April-June 2014. Instead, this sector
faced a rapid increase in the unit operating price caused by rising personnel expenses and
cost of construction materials. Regarding residential investment, a decline in the real interest
rate generated by QQE helped stimulate potential demand for mortgage loans. Conversely,
an increase in housing prices caused by rising construction costs partially discouraged
residential investment by ordinary households.
Nonetheless, let me stress that the economic growth rate for fiscal 2014 could have been
even lower without QQE. Corporate profits as well as the employment and income situation
might have been less favorable than at the current level. QQE has brought negative real
interest rates and promoted the following: (1) the wealth effect, for example through stocks
and real estate; (2) the diversification of financing sources for firms; and (3) a correction of
the yen's excessive appreciation (Chart 4). These effects, in turn, have given rise to various
positive developments by activating firms' fixed investment and pricing behavior, financial
institutions' lending and investment behavior, individual investors' incentives to manage
financial assets, and inbound tourism. Therefore, although there were downward revisions to
the Bank's economic outlook, I believe that the effectiveness of QQE should not be
questioned.
Upward revisions of growth forecasts for fiscal 2015 and 2016
By contrast, the Bank's forecast on economic growth for fiscal 2015 was adjusted upward
significantly from 1.5 percent in the April 2013 forecast point to 2.1 percent in the most recent
forecast. The upward revision is natural since it reflects the adjustment process of returning
from the bigger-than-expected decline in the previous year. In addition, as for reasons why
degree of upward revision was particularly large in the latest January 2015 forecast, I
personally view that the following four factors were incorporated: (1) improvement in
corporate profits and the resultant greater active business fixed investment (owing to a crude
oil price drop and the lagged impact of the yen's further depreciation since November 2014);
(2) gradual recovery overseas (owing to a crude oil price drop) and the resultant positive
effects on exports from Japan; (3) an increase in real income and resultant expansion of
private consumption (driven by a crude oil price drop and the postponement of the second
round of the consumption tax hike); and (4) expected positive effects from the government's
economic measures based on the supplementary budget for fiscal 2014. The most recent
forecast on economic growth for fiscal 2016 was also revised upward to 1.6 percent, partly
because of a shift of the front-loaded increase in spending from fiscal 2015 to fiscal 2016 as
a result of the postponement of the second round of the tax hike.
I project that the potential growth rate will rise gradually toward somewhat below 1 percent by
the end of fiscal 2016. This will occur mainly through an accumulation of capital stock, an
improvement in TFP growth, and a reallocation of the labor force - through corporate sector
restructuring and greater focus on higher value-added goods and services. It is also
expected that the government will make greater efforts in implementing growth strategies
and reforms aimed at promoting greater labor participation by female and elderly persons.
C. Revisions of the bank's outlook for prices
Let me now address the Bank's outlook for prices. The Bank's forecast on the rate of
increase in the core CPI for fiscal 2014 was revised downward from 1.4 percent in the April
2013 forecast point to 0.9 percent in the most recent forecast (Chart 2). The downward
revision was due to the following: (1) the greater-than-expected base effect; (2) the delayed
improvement in the output gap, which had seen an unexpected deterioration for two
consecutive quarters since April-June 2014, although it was at around zero percent (Chart 3);
(3) a slower-than-expected increase in inflation expectations; and (4) a decline in crude oil
prices since around July 2014. These factors delayed the timing for the rate of inflation to
resume the rising trend from fiscal 2014 to the latter half of fiscal 2015.
The adjustment for fiscal 2014 also contributed to the forecast on the rate of inflation for
fiscal 2015, which was revised downward significantly from 1.9 percent in the April 2013
forecast point to 1 percent in the most recent forecast - primarily because of the decline in
crude oil prices. The Bank currently estimates that the contribution of energy items will be in
the range of minus 0.7 percent to minus 0.8 percent of the core CPI. It is projected that
downward pressure on prices caused by crude oil price drops will diminish gradually toward
the middle of fiscal 2015. Subsequently, the rate of inflation is projected to accelerate sharply
from around the second half of fiscal 2015 and approach close to around 2 percent by the
end of the fiscal year for several reasons. First, the pace of improvement in the output gap
will be greater than that envisaged in the April 2013 forecast point due to upward revisions
on the economic growth forecast. Second, there will be the lagged impact of the yen's further
depreciation from November 2014. Third, the pace of the increase in inflation expectations
will also be greater than initially projected, once it resumes its rising trend.
In other words, the forecasts for fiscal 2014 and 2015 reflect the Bank's view that the
underlying price developments will remain intact. First, though the effect from the decline in
crude oil prices is considered temporary, its positive support for economic activities will result
in an improvement in the output gap, thereby eventually reinforcing longer-term upward
pressure on core CPI inflation. Second, while inflation expectations inferred from market data
had exhibited a decrease in recent months, as in the United States and Europe, those
inflation expectations inferred from various surveys remain roughly constant. Third, spring
wage negotiations for fiscal 2015 are currently ongoing. The Japan Trade Union
Confederation demanded an over 2 percent increase in base salary, and the Japan
Federation of Economic Organizations expressed its willingness to make the greatest efforts
to raise wages. These positive developments may be a sign that firms' and households' price
perceptions and related economic behavior are gradually adjusting to a moderately
inflationary environment.
It is expected that these forces will generate sufficient upward pressures on prices such that
the rate of inflation will accelerate to around 2 percent by the end of fiscal 2015. This is why
the Bank maintains the view that this rate is likely to reach about 2 percent around the middle
of the projection period, that is, in or around fiscal 2015. The forecast for fiscal 2016 thus
remains largely unchanged with the rate of increase in the core CPI exceeding 2 percent.
D. Risk factors related to the bank's baseline scenario
Next, let me explain my views on the upside and downside risks that are important as factors
that may affect the Bank's latest outlook. Regarding risks related to the Bank's outlook on
economic activity, I pay particular attention to external factors, including unstable financial
and commodity markets and economic developments abroad, which may work both as
upside and downside risks. In Europe, there is uncertainty regarding the impact of drops in
crude oil prices, debt problems, low inflation, and the geopolitical issues on business fixed
investment and employment conditions. In the United States, the economic recovery is solid.
The normalization process of the monetary policy by the Federal Reserve is notable,
especially with regard to its effect on the domestic economy and markets, as well as global
capital flows and economies. The continued economic recovery in the United States with a
smooth implementation of the exit policy and a moderate increase in crude oil prices will
likely generate upside risks.
Regarding the risks associated with domestic factors, I believe that there is a high degree of
uncertainty with respect to the extent of the increase in business fixed investment and
domestic consumption in response to higher corporate profits and real income growth. First,
it may take some time to improve significantly the sentiments of households that are facing
difficulties following a sharp drop in real income in fiscal 2014. Second, households may
allocate a higher portion of their increased income to savings if they regard it as a temporary
windfall gain and do not expect future permanent income growth. Third, households' and
firms' economic growth expectations may not rise unless the government's growth strategies
make progress. Concerns over the sustainability of the social security system and fiscal
balance may undermine households' and firms' incentives for spending. In this respect, some
local governments, firms, and financial institutions are gradually taking advantage of the
accommodative financial environment generated by QQE and the government's economic
policy and structural reforms to energize the local economy and firms' competitiveness and
innovation. Whether remarkable progress will be made remains uncertain - both in terms of
upside and downside risks.
Turning to my views on risks related to the Bank's outlook for prices, I pay particular attention
to the following three types of risks. First, the crude oil price decline may not only lower the
prices directly through a reduction in imported energy prices, it may also lower prices
indirectly, through a decrease in overall imported prices caused by global disinflation.
Second, though a rise in income (nominal and real) and the resultant improvement in
households' sentiments may make it easier for firms to charge higher sales prices, some
firms may lower or contain sales prices to acquire greater market share in the presence of
fierce domestic competition. Third, inflation expectations may remain sluggish throughout
fiscal 2015 so that the timing for these expectations to resume rising may be delayed.
Alternatively, these expectations could become unstable because those of households in
particular are heavily affected by the actual price movements of daily necessities and
gasoline, as I will indicate later. Finally, in my view, given that QQE was already expanded in
October 2014, a temporary reduction in the core CPI inflation is acceptable as long as the
underlying price developments and recovery process in domestic demand continue.
Nonetheless, the timing of a rate of inflation approaching around 2 percent now entails
greater uncertainty, including the possible delay from the Bank's latest forecast.
III. Overview of inflation expectations in Japan
A. Underlying price developments
Earlier, I mentioned that the Bank regards underlying price developments as having
remained unchanged despite a fall in actual inflation rate. Here, I will first explain more
clearly what the Bank means by underlying price developments. Generally, underlying price
developments are assessed by the output gap and medium- to long-term inflation
expectations, and they are typically monitored through the core CPI - assessed after
excluding volatile items (that is, fresh food in the case of the Bank). Of course, these
relationships are reflected in the trend in income growth and firms' price-setting behavior.
However, the core CPI is not the only indicator monitored. The Bank looks at a wide range of
other price indicators, including the 10 percent trimmed mean, the Laspeyres chain index,
the ratio of items whose prices are rising to core CPI items (the rising-CPI item ratio), and the
breakdown items of the CPI. Producer price index, services producer price index, and
commodity prices are also closely monitored. The core CPI, 10 percent trimmed mean, and
Laspeyres chain index have shown a decline since the middle of 2014. By contrast, the
rising-CPI item ratio has remained unchanged (Chart 5).
In practice, whether the underlying price developments remain unchanged could be
assessed by observing whether (1) the prices of a wide range of items are increasing,
(2) such a rise is persistent, and (3) medium- to long-term inflation expectations have on the
whole increased or at least remained stable. Currently, the rising-CPI item ratio indicates that
a persistent increase in prices is widely observed for about 60 percent of the items covered
by the core CPI. On medium- to long-term inflation expectations, some market-based
indicators - such as the break-even inflation (BEI) and inflation swap rates - declined over
the past months, but have become constant or begun to rise recently (Chart 6). Moreover,
the survey-based indicators of firms, households, and economists have remained more or
less stable, as noted earlier (Chart 7).
B. Medium- to long-term inflation expectations
Major central banks have clear inflation targets and conduct monetary policy so as to achieve
around 2 percent in the medium term. Under the so-called flexible inflation-targeting
framework, a temporary deviation of actual inflation from the target is accepted. This is
permissible as long as there is a natural tendency for actual inflation to converge to around
2 percent. In assessing whether such a tendency prevails, medium- to long-term inflation
expectations play an essential role. If these expectations remain stable (or "anchored") at
around 2 percent, actual inflation is likely to converge to around 2 percent - even if actual
inflation fluctuates around the target. In this environment, wage negotiations and firms'
pricesetting behavior are more likely to be determined based on expectations of approximately
2 percent inflation. Such an economy could be referred to as having achieved price stability.
In the case of Japan, where mild deflation has persisted over a long period, inflation
expectations have not been anchored. Moreover, those inflation expectations have been
volatile at around 1 percent. Thus, one of the Bank's challenges is to raise and anchor such
expectations toward around 2 percent.
A central bank generally makes a judgment on the movements of medium- to long-term
inflation expectations using several indicators; this is because the levels of inflation
expectations and their directions of movement often differ. This reflects the fact that (1) each
indicator entails various, specific biases, and (2) some indicators target different price
indexes. With (1), for example, households' inflation expectations tend to be upward-biased
since households always expect that the price level will increase, as will be discussed later.
By contrast, large firms' expectations on sales prices tend to be downward-biased because
they tend to make cautious management plans. With (2), for example, the Opinion Survey on
the General Public's Views and Behavior compiled by the Bank asked respondents the price
outlook referring to "overall prices of goods and services the respondents purchase." By
contrast, the Bank's Tankan (Short-Term Economic Survey of Enterprises in Japan) explicitly
refers to the CPI when asking firms about their outlook on general prices. Moreover, the BEI
and inflation swap rates target the core CPI, but they include both inflation expectations and
various premiums. Chart 8 provides basic information about survey based indicators on
short-term (one year or less) and medium- to long-term (over one year) inflation
expectations.
In achieving price stability, what matters most are the inflation expectations of firms and
households, as well as their associated economic behavior. I will therefore concentrate on
these inflation expectations here.
C. Developments in inflation expectations of firms
The Bank's quarterly Tankan asks about 10,000 firms with at least 20 million yen in capital
about their outlook regarding sales prices (rate of price changes relative to the current level)
and general prices (annual percentage rate changes) for three projection periods: one year,
three years, and five years ahead. These questionnaires have been incorporated since the
March 2014 survey, and so currently four forecast points are available: March, June,
September, and December 2014. Since the amount of data acquired is not yet sufficient,
some caution is required in interpreting the results. The respondents are also decomposed
into four groups (large manufacturing, large nonmanufacturing, small manufacturing, and
small nonmanufacturing). I will now share with you in the following sections my preliminary
observations on the survey results. Since the findings that I will describe remain largely
unchanged across the forecast points, I will focus on the latest (December 2014) forecast.
Inflation expectations for sales prices (one, three, and five years ahead)
The outlook on sales prices is chosen from ten options from "around plus 20 percent or
higher" to "around minus 20 percent or lower" (categorized in 5 percent increments) and
"Don't know." The average inflation outlook on sales prices for "all firms, all industries" is
1 percent for one year, 1.7 percent for three years, and 2 percent for five years ahead, and
shows a rising trend relative to the current level.
It should be noted that these figures refer to the rate of changes relative to the current level,
not the annual percentage rate change. Thus, taking the difference between these
intertemporal figures gives a 0.7 percent increase for three years relative to one year ahead
and a 0.3 percent increase for five years relative to three years ahead. Namely, the scale of
the sales price increase tends to fall as the projection period moves from one to five years
ahead. Another caution is that the average outlook figures are obtained from the sample pool
after excluding the "Don't know" respondents. So the average outlook figures are based on a
limited number of respondents - especially for the outlook over three and five years ahead.
• First, large manufacturing firms expect on average that sales prices will remain
unchanged from the current level in three years' time (plus 0.1 percent) and will fall
from the current level in five years' time (minus 0.2 percent). This shows a sharp
contrast from the three other groups, all of which expect a rising sales price level
from the current level (Chart 9). In large manufacturing, the declining price
expectation is evident for five years ahead, especially among processing sectors,
such as electrical and transportation machinery. Given that these sectors face fierce
competition, large firms in these sectors are more likely to formulate their business
plans conservatively or envision their future sales prices without an increase.
• Second, regardless of the scale of firms, nonmanufacturing firms tend to expect their
future sales prices to be higher than manufacturing ones. Among large
nonmanufacturing firms, relatively higher sales prices are expected in the
construction & real estate sectors for three years ahead and in the construction
& real estate, retailing, and accommodations & eating & drinking services sectors for
five years ahead. With small nonmanufacturing firms, relatively higher sales prices
are expected in the construction & real estate and accommodations & eating
& drinking services sectors for three years ahead and in the construction & real
estate, wholesaling & retailing, accommodations & eating & drinking services, and
transport & postal activities sectors for five years ahead. Some of these sectors are
already facing a labor shortage, higher real estate prices in large cities, or a rise in
construction materials.
These two observations suggest that sales prices are projected to rise in nonmanufacturing -
rather than in manufacturing - and in the labor-intensive sectors.
Next, I examine the three largest responses - "around plus 5 percent," "around 0 percent,"
and "Don't know" - among the aforementioned ten options. The following additional points
are observed:
Third, for "all firms, all industries," the responses for one year ahead tend to
•
concentrate on "around 0 percent" (from the current level); they account for about 60
percent of all responses. The next-largest responses are related to "around plus 5
percent," which account for about 20 percent. By contrast, the responses for three
years ahead are more widely spread among the various options. The largest
responses are for "around 0 percent" (accounting for about 30 percent), and the next
two largest responses are for "around plus 5 percent" and "Don't know" (accounting
for over 20 percent each). Those three options account for about 80 percent of all
responses. Regarding the responses for five years ahead, the largest responses
relate to "Don't know" (accounting for about 35 percent); the proportion of the
"around 0 percent" responses drops to about 20 percent and that of the "around plus
5 percent" responses remains at over 20 percent (Chart 10-1).
• Fourth, the four-group classification indicates that there are greater differences
between large and small firms rather than between manufacturing and
nonmanufacturing. For both large and small firms, the "Don't know" responses grow
as the projection period increases from one year to five years ahead. However, the
proportion of the "Don't know" responses is greater among large than among small
firms for any projection period. Small firms tend to choose the "around plus
5 percent" option more frequently than large ones (Charts 10-2, 10-3, and 10-4).
In light of these responses, it may be said that small manufacturing firms find it easier to form
expectations on sales prices than do large ones. This is probably because small
manufacturing firms tend to project future sales prices through supplier-transaction
relationships with large firms and also because they deal with limited kinds of parts and
intermediate goods. Meanwhile, small nonmanufacturing firms form expectations on sales
prices by taking into account an expected increase in production costs while considering
relevant market prices influenced mainly by large nonmanufacturing firms. This may reflect
the fact that small nonmanufacturing firms are relatively more labor intensive than large ones
and are already facing a labor shortage.
Inflation expectations on general prices (one, three, and five years ahead)
Let us now examine the outlook for general prices, as measured by the CPI. The responses
are chosen from ten options, ranging from "around plus 6 percent or higher" to "around minus
3 percent or lower" (categorized in 1 percent increments), and "Don't have clear views" with
three sub-