Nationwide inflation remains "relatively weak" but prices will gradually be pushed up toward the Bank of Japan's 2 percent target by rising labor costs, Gov. Haruhiko Kuroda said Monday.
"Firms' price-setting stance going forward is the key to the bank's outlook for prices," Kuroda told a meeting with business leaders in Nagoya. "Firms that have faced a rise in labor costs due to tight labor market conditions are likely to consider passing on a rise in wage costs to prices of their products and services."
The labor market in Japan is the tightest in decades, with more than 1.5 openings for every job seeker and unemployment steady below 3 percent. Prime Minister Shinzo Abe often touts the strong conditions as one of the accomplishments of his economic policies.