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Japan’s Real Wages Decline for Fourth Month as Inflation Outpaces Pay Hikes

Price gains of about 4% have kept pace with nominal earnings growth, testing the Bank of Japan’s efforts to normalize monetary policy.

Shoppers make their way at a shopping district in Tokyo, Japan, March 19, 2024. REUTERS/Kim Kyung-Hoon/File Photo
An employee of a supermarket named Akidai works at a store in Tokyo, Japan January 20, 2023. REUTERS/Issei Kato/File Photo
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Overview

  • Real wages fell 1.8% in April from a year earlier, marking the fourth straight monthly decline in purchasing power.
  • Consumer inflation has hovered around 4% for five months, eroding the benefits of rising pay.
  • Total average cash earnings rose 2.3% to 302,453 yen in April, with base salaries up 2.2% at their fastest pace in four months.
  • Major Japanese firms agreed to more than 5% pay increases during spring wage talks in March, with implementation set to roll out gradually.
  • Policymakers warn that U.S. trade tensions could undercut wage momentum and complicate monetary tightening plans.