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Japan's August real wages rise on low prices again

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Japanese real wages in August increased despite a slight dip in nominal cash earnings, helped by the effect of falling prices yet again, data showed on Friday.

[TOKYO] Japanese real wages in August increased despite a slight dip in nominal cash earnings, helped by the effect of falling prices yet again, data showed on Friday.

Real wages, which are adjusted for inflation, rose 0.5 per cent in August from a year earlier, the lowest pace in three months. In the previous month, they grew 1.8 per cent on-year, revised data from the labour ministry showed - an increase that was also boosted by falling prices.

"Real wages were positive although nominal cash earnings were minus 0.1 because the core consumer price index (CPI) was negative in August," said a labour ministry official.

Wage earners' nominal cash earnings dipped 0.1 per cent in August, the first decrease in three months. In July, they rose 1.2 per cent on-year, revised data showed.

While pay increases and higher spending are key for the success of the government's strategy to wrench the economy out of a long deflationary phase, wage gains inflated by low prices may not spur private consumption, which remains sluggish.

Despite a tight job market, many firms also remain wary of boosting wages and raising fixed costs when inflation is negligible - which in turn dampens households' readiness to spend.

Japan's core CPI fell 0.5 per cent in August, a sixth straight month of declines.

Special payments, such as bonuses, sank 7.7 per cent in August, compared with a revised 1.8 per cent gain in July. Because special payments are generally small, even a slight change in the amount can cause big percentage changes.

Regular pay, which determines base salaries, increased 0.5 per cent.

Overtime pay - a barometer of strength in corporate activity - fell 1.9 per cent in August.

REUTERS