Japan's real wages drop at fastest pace since 2014 as hot inflation takes toll

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Japan's real wages drop at fastest pace since 2014 as hot inflation takes toll
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Japan's real wages fell the most in nearly nine years in January, official data showed, as four-decade-high inflation squeezed the purchasing power of consumers and undercut efforts by policymakers to revive a COVID-ravaged economy.

"Real wages have probably hit the bottom in January as government subsidies on electricity and gas charges have taken effect in February and base effects of commodity price hikes have run their course," said Azusa Kato, senior economist at BNP Paribas Securities.

Total cash earnings, or nominal wages, posted a 0.8% year-on-year gain in January, the data showed, much weaker than a revised 4.1% growth in December, when strong one-off winter bonusesThe feeble nominal growth in wages in January was well short of the 5.1% consumer inflation rate used to calculate pay in real terms. The inflation rate excludes owners' equivalent rent.

Overtime pay, a gauge of business activity strength, rose 1.1% year-on-year in January, its weakest growth in 22 months.

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