TOKYO – Japanese real wages extended their fall to a 16th consecutive month in July, government data showed on Friday, as salaries failed to keep up with rising prices.
Global financial markets closely follow wage trends in the world’s third largest economy as the Bank of Japan emphasizes sustainable wage rises as a prerequisite for deciding whether and how to pull the plug on its ultra-loose monetary stimulus.
Inflation-adjusted real wages, a barometer of consumers’ purchasing power, slid 2.5 percent in July from a year earlier following a 1.6-percent slump in the month before.
The consumer price index officials use to calculate real wages, which includes fresh food prices but excludes owners’ equivalent rent, remained flat at 3.9 percent .
Workers at major Japanese companies saw an almost 4 percent increase in wages this year, according to a survey by business lobby Keidanren.
Prime Minister Fumio Kishida has ramped up efforts to nudge companies into boosting wages. He said earlier this month the government would accelerate efforts on compiling new stimulus steps to cushion the economic blow from rising inflation.
Nominal pay growth in July slowed to 1.3 percent , after a 2.3-percent jump in June and 2.9-percent hike in May, which marked the fastest growth in nearly three decades.
July’s base annual salary went up 1.6 percent , an improvement from June’s revised 1.3 percent increase.
Overtime pay, a gauge of business activity strength, rose 0.5 percent after a revised 1.9 percent uptick in June.
Special payments climbed 0.6 percent in July from a 3.5-percent gain the month prior, although the indicator tends to be volatile in months outside the twice-a-year bonus seasons of November to January and June to August.
Separate data from earlier this week showed Japanese household spending in July suffered its biggest drop in nearly 2-1/2 years, falling 5 percent from a year earlier.