TOKYO- Japanese real wages fell for a 15th straight month in June, while nominal pay growth also slowed, suggesting companies will need to do more on salary hikes to drive a virtuous growth cycle and allow the central bank to consider exiting easy policies.
Separate data on Tuesday showed Japan’s consumer spending shrank for the fourth month in June, underlining the challenge facing policymakers as the economy remains underpowered despite the end of COVID curbs months ago.
Japan’s wage trends are closely watched by global financial markets as the Bank of Japan has emphasized that sustainable pay hikes amid four-decade-high inflation is a prerequisite for dismantling its massive monetary stimulus.
“Japanese wage growth tends to stall once annual spring wage negotiations are over – the rise we’re seeing isn’t strong enough to boost consumption and achieve (BOJ’s) 2 percent inflation target,” said Takeshi Minami, chief economist at Norinchukin Research Institute.
