in the corporate sector feeds through into the household sector slowly but steadily. although firms are likely to continue to restrain labor costs, upward pressure on wages is likely to increase gradually as firms feel a growing shortage of labor. in fact, wages for temporary and part - time workers are rising, and an increasing number of firms are planning, for the first time in many years, to raise their starting salaries for new graduates. in this spring's wage negotiations, labor unions demanded slightly larger wage increases than hitherto and firms'management tended to accommodate them, at least to a certain extent. firms may become more eager to hire or retain skilled workers in order to maintain and enhance their quality control expertise and their ability to provide value - added goods and services, both of which will give them a competitive edge in the long term. acceleration in wage growth, coupled with the ongoing rise in the number of employees, will likely lead to a more firmly established uptrend in employee income. property income of households is also expected to continue to increase due mainly to the rise in dividends, since households have been increasing their investments in financial instruments such as stock investment trusts. furthermore, how baby boomers, who have started to retire, will spend their retirement benefits and savings should be watched closely. thus, private consumption is likely to follow a moderate upward trend as the positive influence of the strength in the corporate sector feeds through into the household sector via various channels. in this situation, the environment surrounding prices is expected to gradually improve. if the economy continues to grow at a rate exceeding its potential for the next two years, the rate of utilization of resources such as production capacity and labor will further increase. in other words, the output gap will continue to indicate tighter supply and demand conditions. as the strength in the corporate sector leads to further increases in employee income, it is natural to expect that supply and demand conditions for consumer goods and services will improve and that this will exert upward pressure on consumer prices. moreover, unit labor costs ( labor costs per unit of output ), although currently still declining with the growth rate of wages hovering around 0 percent, are likely to stop falling and start showing modest increases reflecting gradual rises in wages. although inflation expectations in the private sector have shifted down due mainly to past falls in the prices of petroleum products, prices in general are still expected to increase moderately. taking these developments into account, the year - on - year rate of change in the cpi is likely to be around 0

might be. and all the signs have been pointing to a slower growth trend. you may have had destiny ’ s child — beyonce — turned up too loud to spot the signs, but they have certainly been there. slow trend growth and low r - star in the current global context presents certain challenges to monetary policy, another topic for a future day. in everything that we do, we need to consider all the information, and exercise data dependence and flexibility, as we navigate the course ahead. 1 see john c. williams, interest rates and the ‘ new normal ’, remarks to the community banking in the 21st century research and policy conference, st. louis, missouri ( october 5, 2017 ), and kathryn holston, thomas laubach, and john c. williams, measuring the natural rate of interest : international trends and determinants, 3 / 4 bis central bankers'speeches journal of international economics, volume 108, supplement 1, pp. s59 – s75 ( may 2017 ). 4 / 4 bis central bankers'speeches