Japan inflation adjusted wages -1.4% y/y in May

July 8, 2024 12:32 am

Japan’s inflation-adjusted, ie real, wages fell in May for a record 26th straight month, down 1.4% y/y

  • April was -1.2%
  • falling after inflation wages is dampening household
    spending, which in turn is making the BoJ’s efforts to normalise monetary policy uncertain
  • weak yen and
    higher commodity prices pushed up the cost of imports

There are some better data points in the release.

Base pay +2.5% y/y in May

  • best since January 1993

Nominal wages, average total cash earnings per worker,
+1.9% y/y

  • prior +1.6%
  • best in 11 months

Overtime pay +2.3% y/y

  • first increase in six months

In Japan, seven out of 10 workers are employed by small
firms. These firms are facing difficulties passing on rising costs to their
clients. While wage rises at firms with 30 or more employees outpaced
inflation for the first time in 26 months, at very small firms with five or more
workers, pay hikes still lagged inflation.

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