Real money wages in Japan fell for a fourth month in a row as inflation weighs on Reuters

TOKYO (Reuters) – Japan’s inflation-adjusted real wages fell for a fourth straight month in November, weighed down by higher prices, even as basic pay grew at the fastest pace in more than three decades, government data showed on Thursday.

The Bank of Japan takes various risks into account when deciding when to raise interest rates, and the central bank has repeatedly said that sustained, broad-based wage increases are a prerequisite for rising borrowing costs.

Inflation-adjusted real wages, a barometer of consumer purchasing power, fell 0.3% in November from a year earlier, falling for the fourth month in a row, labor ministry data showed. It revised October’s unchanged reading down 0.4%.

The rate of consumer inflation, which the government uses to calculate real wages and includes fresh food prices but not rent or the equivalent, rose 3.4% from a year earlier, accelerating from a 2.6% rise in October, reflecting higher inflationary pressure.

Base pay, or regular pay, rose 2.7% in November, the fastest increase since 1992, data showed, after major companies agreed to higher pay in spring wage talks.

Overtime pay, a barometer of business strength, rose 1.6% in the month from a revised 0.7% rise in October. Special payments, mostly non-permanent one-off bonuses, rose 7.9% in November, following a revised 2.2% decline in October.

In total (EPA:) cash earnings, or nominal wages, rose 3.0% to 305,832 yen ($1,935.03) for the month, the data showed.

Big Japanese companies are likely to raise wages by about 5% in 2025, the same as last year, the head of a major business lobby said on Tuesday, pledging efforts to spread the momentum of wage growth to smaller firms.

Prime Minister Shigeru Ishiba’s government has put wage increases at the top of its public policy agenda, and Ishiba has promised to push for wage growth at this year’s spring talks.

At last year’s negotiations, Japanese companies achieved their largest wage increase in 33 years.

($1 = ¥158.0500)