Japan's real wages dropped 0.9 percent in 2022 from the previous year for the first decline in two years amid rising inflation, government data showed Tuesday, while household spending continued recovering moderately following the coronavirus pandemic.
The slide in inflation-adjusted wages signaled that food, energy and other price increases, driven largely by Russia's invasion of Ukraine, outpaced pay hikes, despite Prime Minister Fumio Kishida calling on business leaders to raise wages in line with inflation to create a positive growth cycle.
Nominal wages, or the average total cash earnings per worker including base and overtime pay, grew 2.1 percent to 326,157 yen ($2,400) a month, the second straight yearly increase and the sharpest gain in 31 years, the Ministry of Health, Labor and Welfare said in a preliminary report.
In December alone, average real wages marked the first rise in nine months, helped by higher bonuses and corporate allowances to ease the impact of inflation.
But the ministry sees the rebound as temporary, with one of its officials saying that "real wages will continue to decline for the time being."
Separate data showed the country's average household spending in 2022 rose a real 1.2 percent, increasing for the second consecutive year, as people have gradually resumed activities in the absence of recommended restrictions on movement due to COVID-19.
Households of two or more people spent an average of 290,865 yen per month last year, the Ministry of Internal Affairs and Communications said.
By category, educational and entertainment spending rose 8.2 percent on strong travel demand. Spending on transportation and communication grew 6.0 percent with more people using trains and airplanes, according to the data.
Compared with the pre-pandemic level of 2019, household spending in 2022 fell 3.5 percent. The rate of decline has shrunk from the 4.6 percent fall in 2021.
"The impact of the coronavirus is diminishing," a ministry official said.
Household spending in December alone slid 1.3 percent from a year earlier to 328,114 yen for the second consecutive month of decline as people spent less on food, it said.
The data is a key indicator of private consumption, which accounts for more than half of the country's gross domestic product.