Japan’s Real Wages Rise for Eighth Month, Supporting Rate Hikes

Japan's real wages increased by 1.5% in August compared to the same month last year, extending a streak of gains to eight consecutive months. This trend supports the Bank of Japan's recent decision to raise interest rates and suggests further hikes may be on the horizon.

The latest data shows that while real wages grew, the pace of increase slowed from July's revised 2.0% gain. Average nominal wages, or total cash earnings, rose by 3.8% to 311,364 yen, which is slower than the revised 4.3% increase in July.

Workers' base salaries saw a 3.8% increase, matching July's revised figure. Overtime pay growth accelerated to 5.2%, up from July's 4.5%. However, special payments, which include one-time bonuses, showed no growth in August after a 5.3% rise in July.

The inflation rate used to calculate real wages remained steady at 2.2%, down from 3.1% a year earlier. Meanwhile, annual core inflation in Tokyo hit its fastest pace in 10 months, reinforcing expectations for additional interest rate hikes from the central bank.