(MENAFN) Japan saw a significant drop in real wages in May, falling 2.9 percent compared to the same month last year—the steepest decline since September 2023—due to inflation continuing to outpace wage growth, according to recent government statistics.

Real wages, which adjust income for inflation and indicate consumers’ purchasing power, decreased for the fifth month in a row following a revised 2.0 percent decline in April, the Ministry of Health, Labor and Welfare reported Monday.

Meanwhile, nominal wages, representing the average total monthly earnings including base salary and overtime, rose 1.0 percent to 300,141 yen (around 2,073 U.S. dollars). This increase marks the 41st consecutive month of growth but slowed down from a revised 2.0 percent rise in April.

The overall wage growth was dampened by a sharp reduction in special payments such as bonuses and transportation allowances, which dropped 18.7 percent to 12,595 yen. A ministry official explained this was due to fewer companies issuing bonuses in May.

At the same time, consumer inflation climbed 4.0 percent year-over-year in May, mainly driven by higher prices for rice and other food items, keeping real wages below zero and squeezing household budgets.

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