5 percent for april, 1. 4 percent for may, and 1. 3 percent for june. the fact that the rate of increase has been generally at around the same level even after april suggests that the tax increase has been passed on to prices on the whole, on the back of resilient private consumption. with regard to the outlook, the year - on - year rate of increase in the cpi is likely to be around 1¼ percent for some time, as upward pressure from import prices – in particular energy prices – will likely wane, while underlying inflationary pressure – due mainly to the improvement in the output gap – will increase. ii. major points to be considered with regard to the outlook for economic activity and prices as i have mentioned, earlier this month, the bank made an interim assessment of the prospects for economic activity and prices through fiscal 2016 presented in the april 2014 outlook report. as for the bank ’ s baseline scenario regarding economic activity, i personally pay attention to the existing risk both on the supply and demand sides that may lead to a weaker - than - expected economic growth rate, although the economy is expected to continue recovering moderately. as for prices, i also hold a more cautious view of the outlook compared with the forecasts in the baseline scenario. let me share some of my considerations regarding the outlook with you. a. output gap and potential economic growth rate the bank estimates that the output gap in japan turned positive for the first time in almost six years since 2008, to 0. 6 percent for the january – march quarter of 2014. while such estimates are subject to a considerable margin of error, they have been in line with developments in the weighted average of the diffusion indices for production capacity and employment conditions in the bank ’ s tankan ( short - term economic survey of enterprises in japan ). therefore, we can view as confirmed that supply and demand conditions in the economy are gradually tightening further. in particular, a clear tightening trend of supply and demand conditions in the labor market has been observed, as evidenced, for example, by the fact that the active job openings - to - applicants ratio for june 2014 was at a high level, as i bis central bankers ’ speeches mentioned earlier, and that the unemployment rate – which has been hovering at a low level of around 3¾ percent recently – registered 3. 7 percent the same month. on the other hand, the potential growth rate of the economy remains at a low level, and therefore supply - side constraints are likely to

examine developments in income in relation to those in consumption. for the january – march quarter, the year - on - year rate of change in real compensation of employees registered minus 0. 6 percent, which was significantly lower than the 3. 7 percent increase in real private consumption. in a situation where real wages per employee are likely to continue declining for the time being, the pace of improvement in real compensation of employees is likely to be moderate. in such a case, the uptrend in private consumption may weaken, leading to a slower rise in the inflation rate. thus, careful monitoring of future developments is required. nevertheless, i personally consider that, even if the uptrend in private consumption weakens slightly, this will not necessarily have negative effects on the economy in the long run. this is because a significant imbalance is currently observed among the paces of increase in the variables of prices, wages, and private consumption ; for example, real wages seem to be continuing to decline, even on a basis excluding the temporary effects of the tax hike. in such a situation, if weaker growth in private consumption restrains the rise in the inflation rate, it is expected that real wages will increase and private consumption will continue growing bis central bankers ’ speeches moderately at a pace in line with this wage increase. if demand increases in this way at an appropriate pace in a situation where supply - side constraints are beginning to be acknowledged, a more balanced and prolonged economic recovery, albeit moderate, will likely be achieved. d. outlook for prices as for the outlook for prices, i take a more cautious view than the forecast in the bank ’ s baseline scenario. therefore, i formulated a proposal to change the expression regarding the outlook for prices in the april 2014 outlook report, although it was defeated by a majority vote during the monetary policy meeting. specifically, i proposed to change the expression that the year - on - year rate of increase in the cpi “ is likely to be around 1¼ percent for some time, follow a rising trend again from the second half of this fiscal year, and reach around 2 percent around the middle of the projection period ” to a new expression that it “ is likely to remain generally stable around the current level over time ”. i consider that, for the time being, developments in prices will depend mainly on the balance between strengthening of trend inflationary pressure – due mainly to the improvement in the output gap – and waning of upward pressure from import prices. on this point, there seems to