Japan's Real Wages Rise for Eighth Month as Inflation Pressures Mount

Japan's real wages have risen for the eighth consecutive month, increasing by 1.5% in August compared to the same period last year. This positive trend supports the Bank of Japan's decision to continue raising interest rates after its recent hike last month. The growth, however, was slower than July's revised 2.0% gain, indicating a deceleration in wage increases.

Average nominal wages, or total cash earnings, rose 3.8% to 311,364 yen (US$1,969.66), which was slower than the revised 4.3% increase in July. Regular pay, which includes base salaries, increased by 3.8%, matching July's revised figure. Overtime pay saw a significant rise of 5.2% in August, up from July's revised 4.5%. Special payments, however, showed no growth after a revised 5.3% increase in July.

The inflation rate used to calculate the real wage indicator remained steady at 2.2%, down from 3.1% a year earlier. This lower inflation rate contributed to the positive real wage growth. Additionally, data from last week showed that annual core inflation in Tokyo accelerated at its fastest pace in 10 months, further supporting the case for additional interest rate hikes by the central bank.