Average monthly pay, including bonuses, rose 2.6 percent in July to ¥369,846 from a year earlier, marking a rise of 2 percent or more for the first time in a decade, the labor ministry said Tuesday.

Bonuses and other nonregular payments surged 7.1 percent to ¥107,517, contributing to the rise in the average monthly pay at firms with at least five employees.

Accordingly, the margin of decline in the index of inflation-adjusted wages narrowed to 1.4 percent from the 3 percent level seen in the first three months after the April 1 consumption tax hike to 8 percent.

However, the index shows that in real terms, wages are still not keeping up with inflation.

The average basic salary rose 0.7 percent to ¥242,840, up for the second consecutive month, jumping 0.7 percent for regular workers and 0.5 percent for nonregular workers.

An official with the Health, Labor and Welfare Ministry said the rise in average basic salary reflects the outcome of annual labor negotiations over pay this spring, adding that the salary's downtrend seen until April "appears to have ended."

Nonscheduled cash earnings, including overtime pay, grew 3.3 percent to ¥19,489, marking the 16th straight month of gain.

Average monthly pay at companies with at least five employees, including bonuses, last rose in November 2004, jumping 2.0 percent.