Japan's real wages climb for fourth month, bolstering case for BOJ rate hike

Japan's real wages climbed 1.9% in April from a year earlier, marking a fourth consecutive monthly gain. This increase, driven by a significant 7.4% jump in special payments like bonuses, alongside steady nominal wage growth and easing inflation, has improved household purchasing power.

Average nominal wages rose 3.5% year-on-year to 312,425 yen, the fastest growth in over 34 years for three consecutive months. Base salaries, or regular pay, grew 3.4%, unchanged from the previous month, while overtime pay saw a 4.2% increase. The inflation rate eased to 1.5%, remaining below the Bank of Japan's 2% target.

This steady rise in wages and prices is a key prerequisite the Bank of Japan considers for another interest rate hike. The central bank is scheduled to review its rates on June 15 and 16. The easing consumer inflation is partly attributed to government subsidies offsetting rising import costs from a weak yen and surging oil prices.