MNI BRIEF: Wage Hikes At Smaller Firms Spreading - BOJ Report

Smaller firms have raised wages to secure necessary workers amid strengthening labor shortages and high prices, according to a Bank of Japan regional branch report.

Hefty wage hikes at major companies and the rise in part-time worker earnings have also driven wage hikes at smaller firms, the report said. The Bank will focus on the report as it tracks how wage hikes filter through the economy from large to small companies, however, a lift in pay will likely not shift medium- to long-term inflation expectations (See: MNI POLICY: BOJ Unsure Wage Uptick Will Lift Inflation Norm).

The report also noted concerns regional BOJ branch managers had that higher living costs could negatively impact consumer spending, while others reported a recovery in consumer discretionary spending on hospitality and tourism. While inbound tourists drove higher sales, some firms have not been able sufficiently to capture this demand due to the lack of staff, some managers reported.