over. but we all know that we have to stay inside the restraints until the ride is over. that's what we will do as central bankers – until we are durably back to target. thank you. 1 see, for example, forbes, k., j. ha and m. a. kose ( 2024 ), rate cycles, ecb forum on central banking, in particular footnote 3 and section 6 6 / 7 bis - central bankers'speeches 2 eickmeier, s. and b. hofmann ( forthcoming ), what drives inflation? disentangling demand and supply factors, international journal of central banking, previous version available as deutsche bundesbank discussion paper no 46 / 2022. 3 giannone, d. and g. e. primiceri ( 2024 ), the drivers of post - pandemic inflation, ecb forum on central banking, 1 - 3 july 2024. 4 see bauer, m. d., c. e. pflueger and a. sunderam ( 2024 ), changing perceptions and post - pandemic monetary policy, working paper, 1 august 2024, p. 29. 5 stantcheva, s. ( 2024 ), why do we dislike inflation?, brookings papers on economic activity ( bpea ), spring 2024. 6 see nagel, j. ( 2024 ), introductory statement to the press conference presenting the annual report 2023. 7 deutsche bundesbank ( 2024 ), the global disinflation process and its costs, monthly report, july 2024. 8 see, for example, ball, l. ( 1994 ), what determines the sacrifice ratio?, in n. g. mankiw ( ed. ), monetary policy, the university of chicago press, pp. 155 - 193 ; katayama, h., n. ponomareva and m. sharma ( 2019 ), what determines the sacrifice ratio? a bayesian model averaging approach, oxford bulletin of economics and statistics, vol. 81 ( 5 ), pp. 960 - 988 ; and cecchetti, s. et al. ( 2023 ), managing disinflations, cepr discussion paper, no dp18068, cepr press. 9 battistini, n. and j. gareis ( 2023 ), excess savings : to spend or not to

earnings has continued to show high growth, due to a reflection of the results of the annual spring labor - management wage negotiations - - in which the rate of increase in base pay significantly exceeded last year's high rate - - and also due to last year's increase in the minimum wage. meanwhile, potential additional labor supply - - i. e., the difference between the workingage population and the number of employed persons - - is likely to shrink ( chart 8 ). this is because of demographic changes and because labor force participation of women and seniors has already advanced to a high degree. therefore, with labor market conditions becoming increasingly tight, wages will likely become more susceptible to upward pressure. to understand how much capacity firms have for raising wages, i would like to point to labor share, which shows the ratio of labor costs to value - added. labor share is higher at small and medium - sized firms than at large firms, suggesting that their capacity for raising wages is limited. however, looking at wage growth at firms with a high labor share, even small and medium - sized firms tend to have a positive stance toward raising wages if they expect to raise selling prices. with a view to realizing a virtuous cycle between income and spending, i believe it is important to continue to pay careful attention as to whether improving profits, resulting from the passthrough of cost increases to prices, and sustained increases in wages, will spread to micro, small, and medium - sized firms. c. current price developments in japan next, i would like to talk about prices in japan ( chart 9 ). the year - on - year rate of increase in the consumer price index ( cpi ) for all items excluding fresh food is above 2. 5 percent. the year - on - year rate of change in the producer price index ( ppi ), adjusted for the effects of seasonal changes in electricity rates, has risen. this reflects firms'moves to pass on increases in raw material costs, personnel expenses, and other costs to prices, as well as a scaling back of the government's measures to reduce the household burden of higher electricity and gas charges. the year - on - year rate of increase in the services producer price index ( sppi ) has remained relatively high recently at around 2. 5 - 3. 0 percent, mainly on the back of the rise in personnel expenses. the rate of increase in the cpi ( all items less fresh food and energy, 3 / 7 bis - central