Japan's Real Wages Fall in August, Halting Recent Gains

Inflation-adjusted wages in Japan declined by 0.6% in August, raising concerns about the sustainability of economic recovery and potential interest rate hikes.

• Real wages in Japan decreased by 0.6% year-on-year in August, following two months of increases driven by summer bonuses.
• Nominal wages increased by 3.0% in August, marking the largest rise in base salary in nearly 32 years due to recent labor-management pay negotiations.
• Household spending also fell by 1.9% in August, though the decline was less severe than expected and seasonally adjusted spending rose by 2.0% from July.
• The Bank of Japan's plans for further interest rate hikes hinge on sustained wage growth, which is currently uncertain given recent wage data.
• The consumer price index, which includes fresh food prices, rose by 3.5% in August, the highest increase since October of the previous year.

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