emirates7 - Japan's real wages dropped by 2.9% in May compared to the same month last year, marking the fifth month in a row of decline and the steepest fall in nearly two years, according to government data released Monday.

This decline, seen as a key indicator of consumers’ purchasing power, was sharper than the revised 2.0% decrease recorded in April and represents the largest since September 2023. The fall was mainly attributed to a significant reduction in bonuses, Kyodo News reported, citing the Ministry of Health, Labour and Welfare.

Despite this, nominal wages — the average total monthly earnings including base salary and overtime — rose by 1.0% to 300,141 yen (approximately $2,000), continuing a growth streak for the 41st consecutive month.

Japanese firms had agreed to a 5.25% average wage hike during this year's spring labor negotiations, marking the second year in a row with increases exceeding 5%, as noted by the country's top trade group.

However, consumer prices surged by 4.0% in May, driven primarily by rising food prices like rice, keeping inflation-adjusted earnings in negative territory.

Wages in May were also dampened by a sharp 18.7% decline in special earnings — such as bonuses and transport allowances — which fell to 12,595 yen.