Targeted measures to push Japanese wages and inflation higher should be used instead of deploying additional monetary or fiscal stimulus, according to Takatoshi Ito, an adviser to Prime Minister Shinzo Abe.

The tight labor market is bringing long-awaited pay increases to some workers, but the practice of setting wages based on looking at past price trends needs to be abandoned to achieve the pay rises needed for sustainable inflation, said Ito, who is considered a candidate to be the next head of the Bank of Japan.

Core consumer prices rose 0.3 percent in April, the government reported last week, well below the BOJ's 2 percent goal.