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Japan real wages fall for 5th month in August

Consumer prices rise sharply as weak yen fuels inflation

Policymakers in Japan are urging companies to raise wages to kick-start a growth cycle of higher wages and greater consumer and business spending.   © Reuters

TOKYO (Reuters) -- Japan's real wages fell in August for a fifth straight month, government data showed on Friday, as a plunge in the yen lifted consumer prices at the fastest pace in eight years, outstripping modest pay growth.

While the Bank of Japan maintains massive monetary easing, policymakers are urging firms to raise wages to kick-start a sustainable growth cycle of higher wages and greater consumer and business spending while easing the pain of inflation that has been amplified by the currency's slide to a 24-year low.

Inflation-adjusted real wages dropped 1.7% in August from a year earlier, labor ministry data showed, following a revised 1.8% fall in the prior month.

The consumer price index (CPI) used by the ministry to calculate real wages, which includes fresh food prices but excludes owners' equivalent rent, rose by an annual 3.5%.

That was the fastest since the 3.9% recorded in September 2014 and outpaced a 1.7% rise in nominal total cash earnings following a revised 1.3% gain in July.

Overtime pay, a key indicator of strength in corporate activity, increased 4.3% in August from a year earlier, the smallest gain in five months.

Special payments, which include the discretionary seasonal bonuses that firms tend to slash when they face headwinds, rose 0.7% in August after a 1.6% increase the previous month.

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