Japan data – January inflation adjusted real wages -1.8% y/y

Wages data from Japan for January 2025

Labour Cash Earnings +2.8% y/y, solid nominal growth

• expected +3.0%, prior +4.4%

Real Cash Earnings (this is the inflation adjusted figure) -1.8% y/y, dragged down by a two-year high CPI rates

• expected –1.6%, prior +0.3%

Overtime pay +3.1% y/y

• prior +0.8%

Japan’s spring wage talks begin in just a few days. Annual rounds of pay negotiations are held each
spring. The talks will conclude just after the middle of this month. Agreements reached at these set a standard for the salary negotiations of non-unionised workers and smaller enterprises. Japan’s largest labour group last week said its member unions
were demanding an average 6.09% pay hike. Also:

• Japanese labour unions push for record wage hike amid rising costs

The data today shows that despite regular pay rising the most in more than 30 years and
overtime pay increasing, inflation at a
two-year high (the consumer inflation rate the ministry uses to calculate real wages, which includes fresh food items but not rent costs, rose to 4.7%) dragged down real wages. Real wage growth is key to consumption-driven economic
growth.

The Bank of Japan next meet on March 18 and 19 and the Bank is widely expected to keep interest rates
unchanged. Officials at the BoJ want great confidence on the sustainability of wage
growth before following up with another hike after January rate hike.

This article was written by Eamonn Sheridan at www.forexlive.com.