Japan’s real wages rise for ninth month in September, backing BOJ rate hike

[TOKYO] Japan’s real wages rose 2.2 per cent in September from a year earlier, marking the ninth consecutive month of gains, government data showed on Friday (Nov 6), supporting the case for the Bank of Japan to keep raising interest rates.

Growth in real, or inflation-adjusted, pay picked up from August’s revised 1.6 per cent gain.

Average nominal wages, or total cash earnings, rose 4.6 per cent to 311,409 yen (US$1,972.94), the fastest rise since January 1997 and up from August’s revised 3.9 per cent growth.

Workers’ base salaries, or regular pay, increased 3.7 per cent, roughly in line with the 3.8 per cent gain in August. A labour ministry official cited a steady rise in base salaries this year as a factor behind the improvement in real wages.

Overtime pay growth in September stood at 3.6 per cent, down from August’s revised 4.9 per cent rise.

Special payments, consisting mostly of volatile one-time bonuses, jumped 32.6 per cent in September after a revised 1.8 per cent increase in August. The ministry said the jump reflected a statistical quirk rather than an increase in bonuses or other payments.

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The inflation rate used by the ministry to calculate the headline real wage indicator accelerated to 2.4 per cent in September from 2.2 per cent in August. It remained below the year-earlier level of 3.4 per cent.

Annual core inflation in Japan’s capital well exceeded the central bank’s 2 per cent target in October, data showed last week, highlighting ​mounting price pressure and cementing the case for further BOJ rate hikes. REUTERS