MNI BRIEF: Japan July Real Wages Positive Since Dec

The inflation-adjusted real wage, a key gauge of households’ purchasing power, turned positive in July for the first time since December 2024, rising 0.5% y/y after -0.8% in June, preliminary data from the Ministry of Health, Labour and Welfare showed Friday.

The rebound was driven by higher bonuses and wage hikes from annual labour negotiations. While supportive for the Bank of Japan’s case to raise rates, officials see the data as insufficient on its own, with focus instead on the likelihood of wage gains carrying into fiscal 2026.

The year-on-year rise in total CPI excluding imputed rents slowed to 3.6% in July from 3.8% in June.

Nominal wages rose 4.1% y/y in July after 3.1% in June, with scheduled earnings up 2.6% versus 2.0% the prior month. Overtime pay climbed 3.3% after rising 0.5% in June, while bonuses and other special pay jumped 7.9% after 4.4% previously.

Constant sample data, closely monitored by the BOJ as it strips out sampling volatility, rose 2.4% y/y in July, unchanged from June.