Japan's real wages edged down in December for the 12th month running, the labour ministry said on Monday, as gains in nominal pay failed to fully offset easing consumer inflation.
Key headline figures
- Inflation-adjusted real wages fell 0.1% in December from a year earlier, extending a contraction that began in January 2025. The ministry's release noted the pace of decrease was the slowest since, but did not specify a comparative date in the notice.
- Average nominal wages - total cash earnings - rose 2.4% year-on-year in December to 631,986 yen ($4,029), accelerating from a revised 1.7% growth in November.
Breaking down the earnings components, regular pay - the base salary element most closely tied to recurring labour costs - climbed 2.2% in December, an uptick from a revised 1.9% in November. Overtime pay, which is often used as a gauge of private-sector activity, increased 0.9% in December, a slight slowdown from November's 1.2% rise.
Special payments, largely composed of one-off winter bonuses, rose 2.6% in December, compared with a revised gain of 1.5% in November.
For the full year, the labour ministry's release showed Japan's real wages fell 1.3% in 2025. That outcome represents a fourth consecutive year of declining real annual pay since 2022, the year consumer inflation began to exceed the Bank of Japan's 2% objective.
Wage dynamics are a key input for the Bank of Japan as it evaluates further policy moves. The central bank raised its policy rate by 25 basis points in December to 0.75%, and the path of wage growth will be an important factor in determining whether another rate increase is warranted.
Exchange-rate information included with the data release put $1 at 156.8500 yen.
Context for markets and policymakers
The December readings show nominal compensation rising across several components, but the modest increase in aggregate cash earnings was not sufficient to reverse the erosion of purchasing power measured by real wages. As a result, households may continue to face constrained real income growth even as firms report higher cash earnings. The labour ministry's figures therefore carry direct relevance for consumption trends and monetary policy deliberations.