TOKYO, Dec 8 (Reuters) – Japan’s real wages shrank for the 10th consecutive month in October, with an uptick in nominal pay falling short of taming relentless consumer inflation, government data showed on Monday.
The BOJ is likely to raise interest rates next week and the government is expected to tolerate the decision, sources have told Reuters. Wage trends will be among the most important data points when the Bank of Japan board makes a decision on rates during its December 18-19 meeting.
Inflation-adjusted real wages, a key barometer of consumer purchasing power, fell 0.7% in October from a year earlier, the labour ministry data showed.
That was slower than a revised 1.3% contraction in September but extended a losing streak that started in January.
Average nominal wages, or total cash earnings, increased 2.6% from a year earlier to 300,141 yen ($1,941) in October, a three-month high that followed a revised 2.1% growth in the previous month.
The gain was still not enough to surpass the 3.4% rise in consumer prices. The inflation rate used to calculate the headline real wage indicator includes fresh food prices but not rent costs and it tends to be higher than the core rate.
Regular pay, or base salary, rose 2.6% in October, picking up pace from a revised 2% growth in September. Overtime pay, a gauge of private-sector strength, gained 1.5% in October, also better than September’s revised 1% rise.
Special payments, consisting mostly of one-time bonus payments, increased 6.7% in October. The indicator tends to be volatile outside of summer and winter bonus months.
Japan Council of Metalworkers’ Unions, a major labour group representing manufacturers, said last month that it would seek the same target for spring 2026 wage negotiations as it did this year. The country’s biggest union group Rengo, of which JCM is a member, is targeting at least a 5% increase in overall pay next year.
($1 = 154.6200 yen)
(Reporting by Kantaro Komiya; Editing by Thomas Derpinghaus)
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