On Friday, TOKYO Bank of Japan Governor Kazuo Ueda said the country's corporate price-setting behavior was showing changes that could work to push up inflation more than expected.
In July, he also said the central bank will scrutinise various pieces of data in producing its next quarterly growth and inflation forecasts.
The BJ currently expects core consumer inflation to slow below the central bank's 2 per cent target in the latter half of this fiscal year, Ueda said.
The inflation outlook is uncertain, but there is various uncertainty surrounding the possibility of a rise in inflation. What's important are corporate price-setting behavior, which is slightly overshooting expectations, he said.
The outcome of annual wage negotiations between companies and unions this year also led to strong increases in pay, Ueda said.
Japan's core consumer inflation rose to 3.4 percent in April, exceeding the BOJ's 2 per cent ceiling for over a year, as companies continued to pass on rising raw material costs to households.