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Japan February real wage growth stalls as inflation rises

Japan February real wage growth stalls as inflation rises

FILE PHOTO: A businessman uses a mobile phone in front of cherry blossoms in full bloom in Tokyo March 31, 2014. Picture taken March 31, 2014. REUTERS/Toru Hanai

TOKYO: Japan's real wage growth stagnated in February, the government said on Tuesday (Apr 5), as higher inflation matched a rise in nominal wages.

The monthly wage report highlights the challenge a sharp rise in global energy and raw material costs poses to households' purchasing power for an economy that has yet to recover to the size it was before the coronavirus pandemic.

Inflation-adjusted real wages, a barometer of households' purchasing power, were flat in February from a year earlier, as price rises stripped out a gain in nominal wages, labour ministry data showed.

Japan's consumer inflation has been picking up on higher prices of food, fuel and other raw materials, which are being pushed upwards by the Ukraine crisis.

The consumer price index that the ministry uses to calculate real wages, which includes fresh food prices but excludes owners' equivalent rent, rose 1.1 per cent in February, almost double the previous month's 0.6per cent gain.

Nominal total cash earnings increased 1.2 per cent in February, though the gain was largely driven due to a flattering comparison to February last year, when the pandemic took a toll on nominal wages, a labour ministry official said.

Overtime pay, a key indicator of strength in corporate activity, rose 5.8 per cent in February from the same period a year earlier. That marked the 11th straight month of increases and meant an improvement compared with January, when it rose 4.3 per cent year-on-year.

Special payments, which include the discretionary winter bonuses that firms will slash when they face headwinds, rose 4.3 per cent in February.

Source: Reuters/gs

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