Key facts
- Japan's real wages increased by 2.4% in July, the largest gain since May 2021.
- Nominal wages saw their biggest jump since January 1997, rising 4.7%.
- Base salaries increased by 4.1%, the fastest rise since April 1992.
- Inflation used for real wage calculation rose to 2.2% in July.
- BOJ Governor Kazuo Ueda indicated a strong chance of a September rate hike due to inflationary risks.
Japan's real wages rose 2.4% in July from a year earlier, marking the biggest increase since May 2021 and the seventh consecutive month of gains, government data showed. The solid wage data supports the case for the Bank of Japan to raise interest rates at its upcoming policy meeting, three months after its previous rate hike. The growth in real pay was better than June's revised 2.2% gain. A labour ministry official attributed the rise to the boost from special payments, steady growth in nominal wages, and relatively mild inflation. Average nominal wages, or total cash earnings, rose 4.7% to 436,401 yen a month, the biggest jump since January 1997. Workers' base salaries increased 4.1%, the fastest rise since April 1992. Special payments, mostly one-time bonuses, jumped 6.3%. The inflation rate used to calculate the real wage indicator rose to 2.2% in July from 1.9% in June. BOJ Governor Kazuo Ueda recently stated the central bank would debate raising interest rates at upcoming meetings, including in September, focusing on whether inflationary risks were heightening, signalling a strong chance of a hike this month.