Japan July real wages continue to decline as consumer price inflation weighs

TOKYO: Real wages in Japan extended their decline for a fourth consecutive month in July, government data showed on Tuesday (September 6th), as the biggest rise in consumer prices in more than seven years surpassed a much larger rise low nominal wages.

The lack of sustainable wage growth is increasingly becoming a thorny issue for policymakers who hope that stronger consumer sentiment will boost demand and support growth in the world’s third-largest economy.

Inflation-adjusted real wages, a barometer of household purchasing power, fell 1.3% in July from a year earlier, Labor Department data showed, weighed by rising prices .

The consumer price index used by the ministry to calculate real wages, which includes fresh food prices but excludes the equivalent of landlords’ rent, jumped 3.1% from a year earlier, its biggest gain since a 3.4% gain in October 2014.

That topped total nominal cash earnings, which rose 1.8% in July, down from the downwardly revised gain of 2.0% the previous month, the data showed.

Overtime pay, a key indicator of the strength of business activity, rose 4.7% in July from the same period a year earlier, its smallest gain in four months.

Special payments, which include discretionary seasonal bonuses that companies tend to cut when facing headwinds, rose 2.8% in July, below the month’s 3.0% increase previous.