TOKYO – Japanese real wages extended their decline to the 16th consecutive month in July, government data showed Friday, as wages failed to keep up with rising prices.
Global financial markets are closely tracking wage developments in the world’s third-largest economy, with the Bank of Japan emphasizing that sustainable wage increases are a prerequisite for deciding whether and how to end its ultra-loose monetary stimulus measures .
Real wages adjusted for inflation, a barometer of consumer purchasing power, fell 2.5 percent in July from a year earlier, following a 1.6 percent decline the month before.
The consumer price index used by officials to calculate real wages, which includes prices for fresh food but excludes the equivalent of landlords’ rent, remained stable at 3.9 percent.
Workers at major Japanese companies have seen their wages rise by almost 4 percent this year, according to a survey by business lobby Keidanren.
Prime Minister Fumio Kishida has stepped up efforts to encourage businesses to raise wages. He said earlier this month that the government would accelerate efforts to develop new stimulus measures to cushion the economic shock caused by rising inflation.
Nominal wage growth slowed in July to 1.3 percent, following a 2.3 percent jump in June and a 2.9 percent rise in May, marking the fastest growth in nearly of three decades.
July’s annual base salary increased by 1.6 percent, an improvement from June’s revised 1.3 percent increase.
Overtime, an indicator of the strength of business activity, rose 0.5% after a revised 1.9% rise in June.
Special payouts rose 0.6 percent in July compared to a 3.5 percent gain the previous month, although the metric tends to be volatile outside of the biannual bonus seasons from November to January and from June to August.
Separate data from earlier this week showed that Japanese household spending suffered its biggest drop in almost two and a half years in July, down 5 percent from a year earlier.
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