Japan’s real wages in August experienced a 0.6 percent decline from the previous year, the first decrease in three months. The slower wage growth failed to match the acceleration of price increases, impacting consumers’ purchasing power. The drop in inflation-adjusted wages was also influenced by the diminishing effect of higher summer bonuses paid earlier in the year.
Despite this, Japanese companies had agreed to significant wage hikes during labor negotiations, responding to worker shortages. The government’s push for increased wages aimed at fostering a cycle where rising wages lead to higher consumer spending.
New Prime Minister Shigeru Ishiba pledged to implement measures to accelerate real wage growth and boost consumer spending, which is closely monitored ahead of the general election. The Ministry of Health, Labor, and Welfare reported a 3.0 percent growth in nominal wages, marking the 32nd consecutive month of increase.
In August, household spending in Japan also saw a 1.9 percent decline from the previous year, affected by factors like transportation disruptions and natural disaster warnings. Despite this, the average monthly income of salaried households increased by 2.0 percent, indicating a positive trend for private consumption, a significant contributor to Japan’s GDP.
© KYODO