Japan’s real wages rose for a fifth consecutive month in May, although the pace of growth slowed as inflation accelerated and continued to erode workers’ purchasing power.
Government data released on Tuesday showed inflation-adjusted wages increased 1.4% year-on-year in May, easing from April’s revised 2.0% gain as consumer prices rose more quickly.
Nominal wages, measured by total cash earnings, climbed 3.2% from a year earlier to an average of 311,165 yen (about US$1,918), slowing from the revised 3.6% increase recorded in April.
Regular pay, which reflects base salaries, rose 3.0% after a revised 3.3% gain the previous month. Overtime pay also lost momentum, increasing 2.9% compared with April’s revised 4.8% growth.
Special payments, mainly seasonal bonuses that tend to fluctuate outside the summer and winter payout periods, increased 5.2% in May, slowing from April’s revised 10.3% rise.
The latest figures suggest wage growth remains resilient, helped by Japanese companies delivering annual pay increases of more than 5% for a third consecutive year. However, rising living costs continue to weigh on household purchasing power.
Higher consumer prices have been driven partly by increased import costs stemming from the weaker yen, as well as the knock-on effects of earlier spikes in energy prices following the US-Israeli war on Iran. Those cost pressures are expected to continue filtering through to consumer goods in the coming months.
The data comes after the Bank of Japan raised interest rates to their highest level in 31 years last month. The central bank has repeatedly said sustained wage growth alongside stable inflation is essential before considering any further monetary policy tightening.
