Toyota says negotiations
with its labour union will continue. The first round of talks concluded
on Wednesday.
While Toyota has not yet reached an agreement on pay demands, Mazda is reported to have fully accepted the union’s demand for wage increases.
These spring wage negotiations are being awaited by the Bank of Japan. The Bank wants to see solid wage rises to help cement inflation in place ‘stably and sustainably’. Only then will the Bank consider tightening policy.
Bank of Japan officials say inflation has so far has been driven by cost-push factors. Gains in wages would support ‘demand-pull’ inflation.
Cost-push inflation and demand-pull inflation are two types of inflation that arise from different economic factors. Here’s a comparison between the two:
Causes:
- Cost-Push Inflation: Cost-push inflation occurs when there is an increase in production costs, such as wages, raw materials, or energy prices. These cost increases lead to a decrease in the supply of goods and services, causing prices to rise.
- Demand-Pull Inflation: Demand-pull inflation occurs when there is an increase in aggregate demand for goods and services. This increase in demand outpaces the economy’s ability to supply goods and services, resulting in upward pressure on prices.
Key Drivers:
- Cost-Push Inflation: The main drivers of cost-push inflation are factors like rising labor costs, increased production costs due to higher commodity prices, or government regulations leading to increased costs for businesses.
- Demand-Pull Inflation: Demand-pull inflation is driven by factors such as increased consumer spending, government spending, investment, or expansionary monetary policies that stimulate aggregate demand beyond the economy’s productive capacity.
This article was written by Eamonn Sheridan at www.forexlive.com. Source