Japan Real Wages Fall for 23rd Straight Month in Feb

Reuters

10:15 JST, April 8, 2024

TOKYO (Reuters) — Japanese workers’ real wages fell in February for a 23rd consecutive month, data showed on Monday, suggesting higher prices kept up pressure on consumers’ spending appetite.

The wage trend is among the key data the Bank of Japan examines for pay and inflation outlooks, crucial factors for the central bank to consider in deciding whether to unwind its stimulus policy further.

Inflation-adjusted real wages, a barometer of consumer purchasing power, fell 1.3% in February from a year earlier, down for 23 straight months, data from the labor ministry showed. It followed a revised decline of 1.1% in January.

The consumer inflation rate the government uses to calculate real wages, which includes fresh food prices but excludes rent or equivalent, grew 3.3%, accelerating from 2.5% in January.

But nominal pay grew at 1.8% in February on the year, for its fastest increase since last June.

We will monitor how growth in nominal pay will develop while price gains are weighing down real wages, a ministry official said.

Japanese firms agreed to raise wages 5.24% this year, the biggest increase in 33 years, a survey by the nation’s largest union group Rengo showed last week.

Regular or base salary in February grew 2.2% from a year earlier, faster than a revised figure in the previous month, the ministry said.

Special payments, which include bonuses, slipped 5.5% year-on-year after a revised 12.4% gain in January.

Last month the BOJ scrapped eight years of negative interest rates and other remnants of its unorthodox policy, in a historic shift away from its focus on reflating growth with decades of massive monetary stimulus.