TOKYO (Reuters) – Japan’s inflation-adjusted wages fell for the second straight month in September, government data showed on Thursday, underlining the negative effect of persistently elevated prices on nominal pay.
Real wages, a key indicator of consumer purchasing power in the world’s fourth-largest economy, fell 0.1% in September, labour ministry data showed, compared with a revised 0.8% drop in August.
The soft results came despite nominal pay showing gains and consumer inflation cooling down to the joint-slowest pace since April.
Nominal wages, or the average total cash earnings per worker, grew 2.8% to 292,551 yen ($1,900.67) in September, rising at the same pace seen in August.
The consumer price index the government uses to calculate real wages, which includes fresh food prices but excludes owners’ equivalent rent, climbed 2.9%, decelerating from 3.5% in a month prior.
“Real wages have fallen even though the growth rate of total cash earnings hasn’t changed, so this is seen as being due to the effect of rising prices,” a labour ministry official said.
Real wages bumped into positive territory for June and July thanks to summertime bonuses.
Wages are key to how soon the Bank of Japan could raise interest rates again. The BOJ has said broad based increases in pay must accompany rising prices for inflation to durably meet the central bank’s 2% target.
BOJ Governor Kazuo Ueda said last week wages and prices are moving in line with its forecasts, signalling that conditions are falling into place to increase the borrowing costs further.
Base pay, or regular pay, climbed 2.6% in September, marking the fastest pace of increase in nearly 32 years. Overtime pay, a barometer of corporate strength, fell 0.4% in September after a revised 1.7% increase in August.
($1 = 153.9200 yen)
