Real household incomes should start to rebound in the second half of this year so the recent decline in consumer spending should turn into a renewed increase. What's more, this year's spring wage negotiations resulted in the strongest pay hikes in decades, adding to the momentum behind services inflation. Nonetheless, most of the recent strength in inflation continues to be driven by goods rather than services and goods inflation will continue to moderate as the impact of the previous import shock fades. Accordingly, we still expect inflation to fall below the Bank of Japan's 2% target by year-end. While the Bank has now abandoned negative interest rates and Yield Curve Control, further policy tightening therefore won't be necessary.