The Bank of Japan received a boost in its push for wage hikes as average nominal wages growth accelerated in August, though rising inflation pushed real wages down for a fifth consecutive month, according to data released Friday by the Ministry of Health, Labour and Welfare.
Average wages rose 1.6% y/y in August after rising 0.9% in July, with total monthly average cash earnings per regular employee increasing 1.7% y/y in August compared to 1.3% y/y growth in July.
However, real - or inflation adjusted - average wages posted a fifth straight drop, falling 1.7% y/y in August (vs. -1.8% in July), indicating that households continued to be weighed down by rising living costs caused by high energy and food prices. Total CPI minus imputed rents rose 3.5% y/y in August after rising 3.1% in July.
The weak real wages data indicated that households, especially low-income ones, are being hit more by the rise in food and durable goods prices caused by the rising resource prices and the yen’s fall.
BOJ officials said wage rises are necessary to achieve price rises in a sustainable and stable manner, and they are focused on annual wage hikes next spring. (See MNI INSIGHT: BOJ Policy Waits On Small Firm Wage Hikes)
The likelihood of wage hikes for Japan's workers was underscored in the Bank's quarterly regional economic report released on Thursday, which showed that businesses that had recorded profits and were suffering from labour shortages were considering raising wages next spring. (See MNI BRIEF: BOJ Regional Report Shows Wages Set To Rise)
Overtime pay rose 4.3% y/y in August, slowing from a 4.7% increase in July, and bonuses and other special pay rose 0.7% y/y in August following July’s 1.6% increase.