TOKYO (Reuters) - Japan’s real wages fell at a faster annual rate in August, government data showed, in a discouraging sign that consumer spending could suffer as salary gains fail to keep up with inflation.
Real wages, which are adjusted to reflect changes in consumer prices, fell 2.6 percent in August from a year earlier, following a revised 1.7 percent annual decline in July, data from the labor ministry showed on Tuesday.
The wage report is likely to be a cause of concern for Prime Minister Shinzo Abe after recent weak economic data suggested that soft exports and a sales tax increase in April could drag on the economy longer than expected.
Falling real wages could make politicians reluctant to go ahead with another sales tax hike scheduled for next year.
The Bank of Japan will also take note because it considers wage growth as crucial to achieve its 2 percent inflation goal sometime in the next fiscal year starting in April.
Overtime pay, a barometer of strength in corporate activity, rose 1.8 percent in August from a year earlier, the data showed. That was slower than a revised 3.6 percent annual gain in July.
Total cash earnings rose 1.4 percent in the year to August, also slower than a revised 2.4 percent annual increase in the previous month.
Japan’s economy shrank an annualized 7.1 percent in April-June, the fastest since the global financial crisis in 2009, as consumer spending and capital expenditure weakened after the sales tax increase.
Reporting by Stanley White; Editing by Simon Cameron-Moore