Japan’s real wages increased for a sixth consecutive month in June, strengthening the case for the Bank of Japan to consider another interest rate hike as price pressures remain elevated.
Real wages rose 1.6% from a year earlier, matching the revised increase recorded in May, government data showed on Wednesday.
Nominal wages also continued to climb, with average total cash earnings rising 3.4% year on year to 531,677 yen (US$3,373.6) a month. That marked an acceleration from the revised 3.3% growth recorded in May.
The latest figures showed that the rise in workers’ regular earnings was gathering pace. Base salaries increased 3.4% in June, up from 3.0% in May.
Overtime pay rose 2.8%, unchanged from May after the previous month’s figure was revised down. Special payments, which largely comprise one-off bonuses and tend to be more volatile, increased 3.5% following a revised 7.4% gain in May.
The sustained improvement in real wages comes as Japan’s policymakers weigh whether stronger pay growth can continue to offset persistent inflation and support household spending.
The Japanese government projected in its latest economic forecast last month that nominal wages would increase by 3.1% annually through fiscal 2027. It also expects real wages to continue rising despite ongoing price pressures.
The wage data could add to the Bank of Japan’s case for further policy tightening. The central bank left interest rates unchanged at its July meeting, but Governor Kazuo Ueda pointed to upside risks to prices, which was seen as signalling that another rate increase could come as early as September.
The latest figures will therefore be closely watched by markets as investors assess whether Japan’s improving wage trend is strong enough to give the BOJ more room to raise borrowing costs.
