The Japan Times
First fall in real wages in three months
Japan’s real wages shrank in March as inflation rising at its fastest pace in more than three years outstripped steady nominal wage growth, the government said on Monday.
The report adds to concerns that mounting cost pressure on households’ real income will thwart Japan’s post-pandemic recovery scenarios, even as the government lifted all coronavirus curbs by late March in an effort to foster a strong rebound in consumption.
Inflation-adjusted real wages, a key gauge of households’ purchasing power, dropped 0.2% in March from a year earlier, marking the first decline since December, labor ministry data showed.
Prices are rising fast in Japan, propelled by the global commodity rally in the wake of the Ukraine crisis and the yen’s recent fall to two-decade-lows.
Last month, consumer inflation in the Tokyo area rose at the fastest pace in seven years.
The nationwide consumer price index that the ministry uses to calculate real wages, which includes fresh food prices but excludes owners’ equivalent rent, rose 1.5% in March, the fastest gain since October 2018.
That outpaced nominal total cash earnings, which increased 1.2% in March at the same rate in the previous month, the data showed.
Real wages are expected to post larger falls in coming months if the current price inflation keeps up its speed, because, on the other hand, “it’s unlikely for (nominal) wages to spike in a very short period of time,” a labor ministry official said.
Overtime pay, a barometer of business activity strength, rose 2.5% in March from a year earlier.
The gain, while marking the 12th month of increases, shrank from a downwardly revised 4.9% rise in February.
Meanwhile, special payments rose 10.7% in March, which was the biggest advance in five months and much larger than a 0.6% rise logged in March 2021.
“Some firms posted robust earnings at the end of their financial year in March, and their bonuses to employees may have contributed to the positive reading,” said the official.