increased, as growth expectations have risen and the government's policy measures have become more predictable, so as to avoid the harm caused by budget formulation that focuses only on a single fiscal year. with regard to the household sector, private consumption has data on the inverted yield curves are as of august 24, 2023. the first preliminary estimate. increased moderately, along with improvement in the employment and income situation. for example, the pressure to raise wages has continued due to tighter labor market conditions, and the surge in import prices has peaked out. turning to prices, the year - on - year rate of increase in the consumer price index ( cpi ) for all items less fresh food has slowed from the latest peak of 4. 2 percent for january 2023, mainly due to the effects of pushing down energy prices from the government's economic measures. nevertheless, it marked 3. 1 percent for july, significantly exceeding 2 percent ( chart 2 ). as for the outlook, despite being under downward pressure stemming from the slowdown in the pace of recovery in overseas economies, japan's economy is likely to recover moderately for the time being. this is mainly due to the materialization of pent - up demand, supported in part by household savings that accumulated as a result of covid - 19 pandemic - related restrictions, accommodative financial conditions, the government's economic measures, and firms'efforts to strengthen their earning power. thereafter, with overseas economies picking up, the economy is projected to continue growing at a pace above its potential growth rate as the virtuous cycle from income to spending gradually intensifies. regarding prices, the yearon - year rate of increase in the cpi for all items less fresh food is likely to decelerate, with a gradual waning of the effects of a pass - through to consumer prices of cost increases led by the surge in import prices ( chart 3 ). b. risk factors for economic activity and prices the outlook just described is subject to uncertainties ; specifically, i am paying attention to the following two factors. first is the sustainability of wage growth. looking at the final results of firms'responses regarding the 2023 annual spring labor - management wage negotiations released by the japan business federation, or keidanren, the wage growth rate was the highest for the first time in 31 years for major firms, at 4. 0 percent, and in 29 years for small and medium - sized firms, at 3. 0 percent. furthermore

the effects of various economic measures, it is necessary to continue to pay attention to structural problems, including the problem of excessive domestic debts. also, the political situation, especially in europe, is another major risk factor for 2017, considering that it disturbed global financial markets in 2016. b. japan's economy japan's economy was in a soft patch until around the first half of 2016, reflecting the turmoil in global financial markets and the slowdown in emerging economies in that period. however, the economy turned up through the end of the year in line with the pick - up in emerging economies. exports are picking up, led mainly by mobile phone parts and other it - related goods as well as automobile - related goods including parts, while production is also improving in line with the progress in inventory adjustments. consumption lacks vigor despite somewhat increasing its resilience recently. however, going forward, consumption is expected to continue increasing moderately because household and business sentiment is generally picking up against the background of the solid employment and income situation and because stock prices have stayed firm. if the effects of fiscal stimulus measures under the recent supplementary budget are taken into consideration, japan's economy is expected to maintain the growth pace of around 1. 5 percent in fiscal 2017, as it did in fiscal 2016. although there are many points to discuss concerning japan's economy, here, i would like to focus on the relationship between the recent employment situation and wages in connection with the price situation, which will be discussed later. across japan, labor shortage is becoming serious and the employment situation is becoming increasingly tight. however, the tight employment situation in local regions is presumed to be partly due to demographic effects. for example, the active job openings - to - applicants ratio before the 2000s varied significantly by region in times of favorable economic conditions, with well - performing regions recording a steep rise in the ratio, while the ratio remained low in regions where the employment situation remained sluggish. in contrast, in the current economic phase, the variance between well - performing and other regions has become small, as the ratio is also rising in regions where it was low. in 2016, the active job openings - to - applicants ratio surpassed 1. 0 in all 47 prefectures for the first time. the rise in the ratio in local regions is presumed to be due in part to a decline in the number of job applicants caused by population migration, so it seems not quite right to simply interpret the rise as a result of improvements in the economic situation