Japan's Wage Data

TOKYO (Reuters) – Japan's inflation-adjusted wages fell for the second consecutive month in September, highlighting the ongoing impact of high prices on nominal pay.

Real wages, an important measure of consumer purchasing power in the world's fourth-largest economy, declined by 0.1% in September, according to labour ministry data, following a revised 0.8% drop in August.

These disappointing figures occurred despite nominal pay increases and a slowdown in consumer inflation to its joint-slowest pace since April.

Nominal wages, which reflect the average total cash earnings per worker, rose by 2.8% to 292,551 yen ($1,900.67) in September, maintaining the same growth rate as August.

The consumer price index used to calculate real wages, which accounts for fresh food prices but excludes owner's equivalent rent, increased by 2.9%, down from 3.5% the previous month.

A labour ministry official noted, "Real wages have fallen even with stable growth in total cash earnings, attributed to rising prices."

Real wages temporarily improved in June and July due to summer bonuses.

Wages play a crucial role in determining when the Bank of Japan (BOJ) might raise interest rates. The BOJ has indicated that broad-based wage increases must accompany rising prices to achieve its 2% inflation target sustainably.

BOJ Governor Kazuo Ueda stated last week that wages and prices are aligning with forecasts, suggesting the conditions are developing for a potential increase in borrowing costs.

Base pay, or regular pay, increased by 2.6% in September, marking the fastest growth in almost 32 years. However, overtime pay, a measure of corporate strength, fell by 0.4% in September after a revised 1.7% rise in August.

> ($1 = 153.9200 yen)