Crude oil prices are on a downward trend, but few expect this to immediately calm domestic prices. The impact of high oil prices feeds through to consumer prices with a time lag, and companies are expected to be reluctant to roll back prices once they have raised them. In the June BOJ Tankan survey, the diffusion index for output prices at large firms rose to plus 40 for both manufacturers and non-manufacturers, indicating an environment where passing on costs remains easy. Daiwa Securities senior economist Kento Minami notes that price pass-through is still insufficient at smaller firms, giving them little incentive to reverse price hikes even if crude oil prices fall back. SMBC Nikko Securities junior analyst Kosei Miyata says service prices have a high labor cost ratio, and wage hikes are likely to keep upward price pressure lingering for a long time.