Office workers are seen reflected in a window as they walk to a train station.
Chris Mcgrath | Getty Images News | Getty Images
Japanese real wages turned positive for the first time in seven months on the back of hefty summertime bonuses, but elevated inflation added to pressure on consumption, data showed on Friday.
Inflation-adjusted real wages, a key determinant of households’ purchasing power, edged up 0.5% in July from a year earlier, the first increase since December last year when they inched up by 0.3%. Special payments, including the bonuses, jumped 7.9%, labour ministry data showed.
“The significant contribution to real wage growth comes from factors such as bonus increases and the steady rise in regular wages,” a labour ministry official said.
The consumer inflation rate the ministry uses to calculate real wages, which includes fresh food prices but not rent costs, rose 3.6% year-on-year in July.
While it rose at the slowest pace since November last year, it far exceeds the Japanese central bank’s 2% inflation target.
Regular pay, or base salary, grew 2.5% in July, the fastest rise in seven months. Overtime pay, a barometer of strength in corporate activity, rose 3.3%, the highest since November 2022.
Total cash earnings, or nominal pay, increased 4.1% to 419,668 yen ($2,848.49) in July, the fastest growth in seven months.
Major Japanese firms, on average, agreed to pay hikes of more than 5% during annual spring wage talks this year.
Bank of Japan Governor Kazuo Ueda said last month that wage hikes were spreading beyond large firms and likely to keep accelerating due to a tightening job market, but there are lingering worries that the U.S. tariffs would cause a global economic slowdown and squeeze corporate profits.
