The latest data from Japan's labor ministry indicated a substantial growth in base salary, with a 2.7% increase recorded in October, the highest since November 1992. This rise in regular pay was attributed to more companies raising salaries, following major firms agreeing to a 5.1% raise during spring wage negotiations. Additionally, overtime pay showed a positive trend, bouncing back to a 1.4% growth from the previous month's decline of 0.9%.
In terms of overall earnings, nominal wages, representing a worker's total cash earnings, experienced a 2.6% growth to reach 293,401 yen ($1,955) in October. However, the inflation rate used for wage calculations, excluding owners' equivalent rent, was at 2.6%, marking a nine-month low. As a result, the inflation-adjusted real wages, which are crucial for consumers' purchasing power, remained stable in October compared to the previous year, reversing the declines seen in September and August.
The political landscape in Japan also played a role, with opposition lawmakers advocating for positive real wage growth after the ruling bloc's loss of its Lower House majority in the October general election. Amidst these developments, BOJ Governor Kazuo Ueda hinted at the likelihood of an impending interest rate hike, citing the alignment of the economy with the central bank's projections. However, reports surfaced about a growing cautious sentiment among BOJ policymakers regarding the timing of a rate hike, adding to uncertainties surrounding a potential December increase.