FX.co ★ Japan Nominal Wage Growth Hits 7-Month High

Japan experienced a significant increase in nominal wages, rising by 4.1% year-on-year in July 2025—the quickest growth observed in seven months, surpassing the anticipated 3% rise. Real wages, which are adjusted for inflation and serve as a crucial indicator of household purchasing power, increased by 0.5% in July. This marks a positive shift for the first time since December, supported by consistent gains in base pay and substantial summer bonuses. However, high prices continued to put pressure on consumer spending. Consumer inflation, which the ministry uses to calculate real wages, surged by 3.6% compared to the previous year, exceeding the Bank of Japan's target of 2%. This year, major corporations agreed to average pay hikes exceeding 5% during the spring wage negotiations. Bank of Japan Governor Kazuo Ueda suggested last month that the trend of wage growth is expanding beyond large corporations and is likely to gain momentum further, fueled by a tight labor market, though concerns linger regarding US tariffs.