TOKYO (Reuters) – Japan’s inflation-adjusted wages fell in August after two months of increases during the summer bonus season, government data showed on Tuesday, reducing the likelihood that the central bank would raise interest rates soon.
Real wages in the world’s fourth-largest economy fell 0.6% in August from the same month a year earlier, according to the Ministry of Health, Labor and Welfare. That came after a revised increase of 0.3% in July.
Real wages rose in June for the first time in more than two years as companies increased summer bonuses, although the Labor Ministry had said the contribution of such special payments to the figures would decline from August.
These payments increased by 2.7% in August, compared to a revised 6.6% in July and 7.8% in June.
Sustained wage growth is a prerequisite for the Bank of Japan to raise rates again after the first rate hike in 17 years in March and the subsequent hike in July.
While the central bank said in its quarterly report on Monday that a rise in prices and wages was spreading across Japan, it also noted concerns from small and medium-sized enterprises about the associated pressure on profits.
Nominal wages, or average total cash income per employee per month, rose 3.0% to 296,588 yen ($1,999.11) from August last year, up from a 3.4% year-on-year increase in July.
Basic pay, or regular pay, also rose 3.0%, while overtime pay, a barometer of companies’ strength, rose 2.6%.
The consumer price index that officials used to calculate real wages, which includes fresh food prices but excludes owners’ equivalent rent, rose 3.5% in August, the highest increase since October last year.
($1 = 148.3600 yen)
(Reporting by Chang-Ran Kim; Editing by Christopher Cushing)