Households continue to be squeezed by weak real wages growth as resource prices rise and the yen weakens.
Average wages rose 1.2% y/y in July after rising 1.1% in June. Real wages stayed in negative territory, down 1.3% in July after falling 0.6% in June, preliminary data released Tuesday by the Ministry of Health, Labour and Welfare showed.
Total monthly average cash earnings per regular employee rose 1.8% y/y in July following +2.0% in June.
In real terms, average wages posted the fourth straight drop, down 1.3% y/y in July, widening from -0.6% in June. Total CPI minus imputedrents rose 3.1% y/y in July after rising 2.8% in June.
The weak real wages indicated that the households, especially low-income ones, are being hit by the rise in food and durable goods prices caused by the rise in resource prices and the yen’s fall.
Bank of Japan officials said that wage rises are necessary to achieve price rises in a sustainable and stable manner and they are focused on annual wage hikes next spring.