FX.co ★ Japan July Nominal Wage Growth Revised Lower

In July 2025, Japan experienced a 3.4% increase in nominal wages compared to the previous year, though this figure was revised down from an initial report of a 4.1% rise. Nonetheless, this marks the quickest wage growth rate in seven months. Conversely, real wages, which account for inflation and serve as a crucial measure of household purchasing power, declined by 0.2% in July, contrary to a preliminary report of a 0.5% increase. This represents the seventh consecutive month of contraction for real wages, as rising prices placed pressure on consumer spending. The consumer inflation rate, utilized by the ministry for calculating real wages, climbed by 3.6% compared to the prior year, significantly surpassing the Bank of Japan’s target of 2%. During this year’s spring wage negotiations, major corporations agreed to average pay raises exceeding 5%. Bank of Japan Governor Kazuo Ueda mentioned last month that wage growth is beginning to extend beyond large corporations and is expected to accelerate further amidst a tight labor market, although potential risks from US tariffs remain.