Real Wages in Japan down for 4th year

Initial results for 2025 suggest real wages in Japan were down for the fourth consecutive year. Initial figures from MHLW show a 0.8% overall decline, alongside a 1.3% fall in wages adjusted for CPI excluding imputed rents, which provides a clearer picture of how hard wage changes are likely to hit households.

Wage increases are now a long-term goal of the Japanese government, with leaders hoping for wage increases high enough to sustain the Bank of Japan’s target of moderate inflation of around 2%. International issues such as the war in Ukraine and price increases by food companies seeking to break out of two decades of profit stagnation have led to much higher-than-expected inflation in Japan. Politicians and economists are hoping for two things this year: another round of high wage increases in the spring wage negotiations, and a flattening out of price hikes, particularly on packaged foods.