when the impact of covid - 19 intensified — but turned upward in 2021 and have returned of late to pre - pandemic levels. outlook for economic activity and prices next, i would like to explain the bank of japan policy board members ’ baseline scenario regarding the outlook for economic activity and prices in japan. chart 5 shows the medians of the members ’ forecasts for economic activity and prices presented in the january 2022 outlook for economic activity and prices ( outlook report ). the real gdp growth rate is projected to be 2. 8 percent for fiscal 2021, 3. 8 percent for fiscal 2022, and 1. 1 percent for fiscal 2023. comparing the projections with those presented in the october 2021 outlook report, the projected growth rate for fiscal 2021 is lower but that for fiscal 2022 is higher. this is because the following points were factored in : ( 1 ) a decline in the growth rate from the middle of fiscal 2021 until the end of the fiscal year due to a drop in production, such as for the automobile sector, as a consequence of supply - side constraints ; and ( 2 ) an increase in the growth rate from the beginning of fiscal 2022 due to such factors as the government ’ s economic measures and a recovery in production to catch up with demand. in short, the baseline scenario is unchanged from that presented in the october 2021 outlook report. specifically, japan ’ s economy is likely to follow a recovery trend as downward pressure stemming from covid - 19 on services consumption and the effects of supply - side constraints wane. the recovery trend is also supported by an expansion in external demand, accommodative financial conditions, and the government ’ s economic measures. thereafter, as the impact of covid - 19 subsides, the economy is expected to show higher growth. turning to the outlook for prices, chart 5 shows the medians of the policy board members ’ forecasts presented in the january 2022 outlook report. the year - on - year rate of change in the cpi for all items less fresh food is expected to be 0 percent for fiscal 2021, 1. 1 percent for fiscal 2022, and 1. 1 percent for fiscal 2023. through fiscal 2022, the rate of change in the cpi is likely to increase in positive territory because of ( 1 ) rises in energy prices and raw material costs and ( 2 ) the dissipation of temporary effects such as a reduction in mobile phone charges. thereafter, the year - on

due to the widespread vaccinations including the rollout of booster shots. nevertheless, it is necessary to keep in mind the risk that the spread of covid - 19 due to a new variant may delay recovery in aggregate demand, which in turn may cause a fall in supply and stagnate the global economy ’ s growth potential itself. second, i am keeping a close eye on the possibility that supply - side constraints will become prolonged and on the possible effects that this will have on economies across the globe. the reason behind the heightened awareness of supply - side constraints since 2020 is that the aggregate supply of goods in particular has been unable to fully keep up with the expansion in aggregate demand amid the prolonged covid - 19 pandemic. as governments and central banks implemented large - scale fiscal and monetary policy measures to minimize the fall in economic activity triggered by covid - 19, aggregate demand, which had been suppressed due to the pandemic, rebounded with the progressive resumption of economic activity. the rebound, in the form of pent - up demand, materialized in the united states and europe, where initiatives were launched early to both reopen the economy and protect public health. on the other hand, with regard to aggregate supply, ( 1 ) labor supply has been slow to recover because those who left the labor market to, for example, avoid infection returned in smaller numbers than expected and supply - chain disruptions and shipping bottlenecks have been protracted. this has led to delays in the recovery of production capacity, not only domestically in the respective economies but also internationally. chart 7 presents inflation rates including prices of energy and food in the left panel and delays in the arrival of goods in the right. the chart shows that ( 1 ) delivery delays have been playing a part in the elevated inflation rates and ( 2 ) delivery continues to be delayed seriously albeit with variation across countries and regions, indicating that such delays are highly unlikely to be resolved easily for the time being. 3 supply - side constraints also affect japan ’ s economic activity, mainly through the following channels : ( 1 ) opportunity losses for firms owing to a decrease in production, ( 2 ) a decline in households ’ purchasing power due to increased inflationary pressure, and ( 3 ) a downturn in corporate profits caused by deterioration in the terms of trade. with regard to the second channel, there is concern that a rise in prices, mainly for essential goods such as energy and food, may affect lower - income households