MNI BRIEF: Japan's Wages Rise 5.46% Vs. 2024's 5.28%

Japan's largest labour confederation Rengo said on Friday its member unions won an average 5.46% increase in wages this year, exceeding 2024's 33 year high of 5.28%, providing impetus for a possible interest rate hike by the Bank of Japan, local media reported.

The wage increase is slightly higher than forecasts by BOJ officials, however, recent surveys and hearing had suggested they could print stronger. 

Rengo's survey also showed base pay rose 3.84% this year compared to 3.70% last year.

Every spring, unions and management hold talks, known as Shunto, to set monthly wages ahead of the start of Japan's fiscal year in April, the results of which give the BOJ an indication of the wage-price relationship and help guide the policy interest rate. (See MNI POLICY: BOJ Sees Steady Wage Hikes Despite Tariff Concerns)

However, high uncertainties over U.S. policies and their impact on the global economy and financial markets could overshadow the favourable results and prompt a more cautious stance.

While the results will also increase the upside risks to prices, it will not drive immediate rate hikes as bank officials expect inflation to fall afterward. (See MNI BOJ WATCH: Board To Hold, Focus On Upside Price Risks)