Real wages in Japan showed its sharpest decline in almost two years in May

According to the Japanese government data, in May, the level of real wages in the country declined at the fastest pace in almost two years due to inflation. Its rate is still outpacing the wage growth and hindering the growth of consumption.

Inflation-adjusted real wages in Japan fell 2.9% in May from a year earlier, after a 2.0% decline in April. The May figures mark the sharpest drop in 20 months, according to Japan's labor ministry.

According to the ministry's official, the main reason for the observed dynamics was an 18.7% drop in special payments, consisting mainly of unstable one-time bonuses. The decline in real wages raises concerns about slowdown in consumption and prospects of Japan's economic recovery, as noted by Reuters.

However, data released last week showed strong growth in Japanese household spending in May. This gives some hope for positive developments, the agency said.

The dynamics of wages is still crucial for maintaining the consumption momentum and is one of the key factors for the Bank of Japan in making decisions on interest rates.