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Japan's September real wages fell for first time in 3 months as inflation bites

Japan's September real wages fell for first time in 3 months as inflation bites

People cross a street in Tokyo on Mar 18, 2015. (Photo: REUTERS/Yuya Shino)

TOKYO: Japan's real wages declined in September for the first time in three months as inflation picked up faster than growth in nominal pay, the government said, a sign of global cost-push inflation starting to affect Japanese households.

In September Japan's core consumer price index (CPI) posted 0.1 per cent growth from a year earlier, the first positive figure since March 2020, driven by rising energy and raw material costs.

Inflation-adjusted real wages, a key gauge of households' purchasing power, fell 0.6 per cent in September compared with the same month a year earlier, the labour ministry said on Tuesday.

It was the first decline in three months after a downwardly revised 0.1 per cent gain in August, due to accelerating consumer price inflation.

The CPI measurement now used by the labour ministry to calculate real wages is different from one closely watched by the Bank of Japan, as the former index still sets its base year to 2015, not 2020, and includes volatile fresh foods but excludes owners' equivalent rent.

This version of CPI posted 0.9 per cent year-on-year growth in September, the fastest pace since December 2019.

Nominal total cash earnings rose for the seventh straight month, up 0.2 per cent in September from a year earlier. It followed a downwardly revised 0.6 per cent advance in August.

Regular pay, or base salary, which makes up most of total cash earnings, was up 0.3 per cent after an upwardly revised 0.5 per cent rise the previous month, the data showed.

Overtime pay, a barometer of strength in corporate activity, grew 4.4 per cent year-on-year in September, gaining for the sixth straight month but slowing from double-digit figures in three months to July. The apparent slowdown came largely from a statistical effect reflecting narrower drops in the months toward the end of 2020, a government official said.

Special payments, which mainly consist of volatile one-off bonuses, fell 2.3 per cent in September from a year earlier, according to the data.

Source: Reuters


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