MNI BRIEF: Japan Nov Wages Rise; Real Pay Falls For 8th Month

Real wages remained in negative territory for an eighth consecutive month in November amid higher inflation, increasing concern over slower consumer spending in the coming months, according to data released Friday by the Ministry of Health, Labour and Welfare.

Average wages rose 1.5% y/y in November after rising 1.0% in October, with total monthly average cash earnings per regular employee increasing 0.5% y/y in November compared to 1.4% y/y growth in October.

However, real - or inflation adjusted - average wages posted a seventh straight drop, falling 3.8% y/y in November (vs. a 2.9% drop in October) for the biggest fall since May 2014 when it fell 4.1%, 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 4.5% y/y in November, accelerating from 4.4% in October and 3.5% in September.

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 are focused on wage hikes as many major businesses showed their willingness to raise wages, although there is high uncertainties over wage hikes by smaller firms. (See MNI POLICY: BOJ To Raise FY23 CPI, Stick With 2% Base View)