Japan Nominal Wage Growth Hits 7-Month High

Japan’s nominal wages rose 4.1% year-on-year in July 2025, the fastest pace in seven months and above expectations for a 3% increase. Real wages, adjusted for inflation and a key gauge of household purchasing power, climbed 0.5% in July, turning positive for the first time since December as steady gains in base pay and large summer bonuses provided support. Still, elevated prices weighed on spending. Consumer inflation used by the ministry to calculate real wages rose 3.6% from a year earlier, well above the Bank of Japan’s 2% target. Major firms agreed to average pay hikes of over 5% in this year’s spring wage talks. BOJ Governor Kazuo Ueda noted last month that wage growth was spreading beyond big companies and likely to accelerate further amid a tight labor market, though risks remain from US tariffs.