MNI BRIEF: Japan March Negative Real Wage Narrows to -0.7%

The year-on-year drop of inflation-adjusted real wages, a barometer of households' purchasing power, narrowed to 0.7% in April from a 2.1% fall in March, preliminary data released by the Ministry of Health, Labour and Welfare on Wednesday showed.

April’s real wages have stayed in negative territory for 25 straight months, its longest period, but marking the highest level since December 2022 when it fell 0.6%.

The persistent negative real wages showed household income has not caught up with price rises but the degree of negative real wages is expected to narrow and move toward positive territory as early as the fourth quarter.

Total CPI minus imputed rents rose 2.9% y/y in April, slowing from 3.1% in March.

Scheduled earnings rose 2.3% y/y in April after rising 1.7% in March, marking the highest level since October 1994.

Total cash earnings, or nominal wages, posted a 2.1% year-on-year gain in April, accelerating from +1.0% in March due to hefty wage hikes at major firms, for the highest level in 10 months.

MNI reported recently the BOJ will take its time understanding the yen's influence on prices and will wait until after it confirms wage strength to consider further tightening. (See MNI POLICY: BOJ To Consider Soft Yen Price Impact, Hikes Delayed)