Government figures released Tuesday show Japan's real wages expanded 1.4% in May compared with the same month a year earlier, marking the fifth straight month of year-on-year growth. The data also indicate a clear slowdown in the rate of real wage growth from April, a development officials attribute to faster consumer inflation.
Real pay in May rose 1.4%, down from April's revised increase of 2%. The deceleration in real wage growth reflects an acceleration in consumer inflation, which the report links to higher energy costs and to effects tied to the U.S.-Israeli war on Iran.
On a nominal basis, total cash earnings were up 3.2% year-on-year in May, reaching 311,165 yen ($1,917.69). That nominal increase was smaller than April's revised 3.6% gain.
Breaking down components of pay, base salaries - regular monthly pay excluding bonuses and other variable components - increased 3.0% in May, following a revised 3.3% rise in April. Overtime pay growth slowed to 2.9% in May from a revised 4.8% in April.
One-off or special payments, which are primarily one-time bonuses, rose 5.2% in May after a revised 10.3% gain in April, indicating a marked moderation in bonus-driven pay growth between the two months.
The Bank of Japan last month raised interest rates to a 31-year high. The central bank has identified steady wage gains together with inflation as its two principal considerations when evaluating whether to lift rates further.
Taken together, the May data depict continued positive momentum in household paychecks but also underscore how rising consumer prices, especially from energy, are eroding real income growth compared with the previous month. Nominal earnings remain higher year-on-year across several pay categories, but the pace of expansion has moderated across base pay, overtime and special payments when compared with revised April figures.