TOKYO (Reuters) – Japan’s inflation-adjusted wages rose for two consecutive months in July thanks to a bump in summertime bonuses, government data showed on Thursday.
Real wages in the world’s fourth-largest economy grew 0.4% in July, rising at a slower pace than June’s 1.1% growth when it turned positive for the first time in 27 months, data from the labour ministry showed.
Wages hold the key to how soon the Bank of Japan could raise interest rates. BOJ Governor Kazuo Ueda has said broadbased increases in pay must accompany rising prices for inflation to durably meet the central bank’s 2% target.
The slowdown in real wage growth in July was primarily due to fewer firms paying bonuses that month than in June, a labour ministry official said. Special payments, including the bonuses, went up 6.2% in July, followed by a revised 7.8% growth in the previous month.
Since most firms pay summer bonuses in June and July, special payments’ contribution in lifting real wages would disappear after August, the official said.
“From August and thereafter monthly wages (composed of regular and overtime payment) will be a deciding factor” in anchoring growth in the real wages, the official said.
Nominal wages, or the average total cash earnings per worker, grew 3.6% to 403,490 yen ($2,785.19), compared with a 4.5% increase in June when it marked the fastest pace of growth since January 1997.
Base pay, or regular pay, rose 2.7%, marking the fastest pace of increase in nearly 32 years, reflecting results from this spring’s labour-management wage talks. Overtime pay, a barometer of corporate strength, fell 0.1% in July, after a revised 0.9% growth in June.
Japanese firms agreed to raise monthly pay by 5.10% on average this year, the biggest pay rise in 33 years.
Meanwhile, the consumer price index officials use to calculate real wages, which includes fresh food prices but excludes owners’ equivalent rent, climbed 3.2%, slightly dipping from a 3.3% jump in the previous month.
“Prices are still at a high level, so if prices subside a little more, real wages may continue to be positive,” the official said.
($1 = 144.8700 yen)
(Reporting by Satoshi Sugiyama; editing by Miral Fahmy)