The Cabinet Office of Japan has estimated that the output gap in Japan (which measures the difference between actual output and potential output of an economy) may be a positive 0.4% in the fiscal year 2025/2026 starting in April next year. A positive output gap occurs when actual output exceeds the economy's full capacity, which is seen as a sign of strong demand. The Cabinet Office of Japan indicated that labor shortages might limit supply due to the stable labor force of approximately 69 million people in Japan. Japan's output gap fell into negative territory in the fiscal year 2019, dropping to negative 4.5% during the pandemic in fiscal year 2020. This is one of the key pieces of data closely monitored by the Bank of Japan to determine whether the strength of economic expansion is sufficient to drive demand-driven inflation. The Cabinet Office of Japan expects the overall Consumer Price Index (CPI), including fresh food prices, to slow its growth rate from 2.5% this year to 2% next fiscal year.