Japan’s real wages fell for the sixth consecutive month in June, dropping 1.3% from a year earlier, due to inflation outpacing pay growth. Core inflation hit 3.8%, the lowest in seven months. While special payments rose by 3%, they failed to keep up with inflation. Total cash earnings increased 2.5% to 511,210 yen in June.

Despite a 2.1% rise in regular pay and a 0.9% increase in overtime pay, real wages continue to decline. Major Japanese firms agreed to pay hikes of over 5%, but smaller companies are slower to implement changes. Wage trends are crucial for consumption momentum and will impact the timing of the next rate hike by the Bank of Japan.

The Bank of Japan maintained its short-term interest rate at 0.50%, expecting rising wages and prices to push inflation towards the 2% target. However, it also downgraded its assessment of consumption, warning of stagnation due to higher prices. A proposed 6% increase in the national average minimum wage is the largest jump since 2002.

Read more at Yahoo Finance: Japan’s real wage falls for sixth straight month in June