MNI BRIEF: BOJ Regional Report Shows Wages Set To Rise

Japanese firms are considering implementing wage hikes or increasing wages on the back of solid profits and ongoing labor shortage, supporting the central bank's view and boosting hops of hitting the 2% price target, according to Bank of Japan branch managers.

The latest managers report published Thursday shows managers noting firms increased winter bonuses, although some businesses are still struggling to raise wages due to sluggish profits and high costs. Bank officials are focusing on the scale of wage hikes at major firms and whether they spread to workers at smaller firms, which account for about 70% of Japan's workforce.

Branch managers largely reported solid sales or firm despite retail price hikes, showing that price hikes are accepted by households, indicating the beginning of a price-wage virtuous cycle. Managers also pointed to a bright sign of exports and production, saying that they are increasing as a trend as the supply-side restriction eased.