Real wages in Japan fell in August, bringing into doubt the earnings recovery some politicians hope will drive a sustained economic recovery.

The labor ministry said real wages declined 0.6% year-on-year in August as high inflation ate away at solid nominal gains. This followed a positive reading in June, which broke a 26-month streak of real-wage declines, and another positive reading in July.

The increases in those two months “were largely due to volatile summer bonuses, so it was too early to conclude that real wages had achieved a sustainable positive trend,” Takahide Kiuchi, executive economist at Nomura Research Institute, wrote in a report released on Tuesday.

Politicians have been counting on wage growth to lead the economy out of decadeslong doldrums, but the strategy has been stymied in part by rising prices. The weak yen has only made matters worse, as the cost of imported goods tends to rise when the currency falls against the dollar.

Tuesday’s data showed that nominal wages per worker including bonuses in August climbed 3.0% year-on-year to ¥296,588, the 32nd consecutive monthly increase, while base salaries for full-time workers rose a record 2.9% year-on-year.

Analysts said that real-wage growth could turn positive again in September, in part due to the reintroduction of government subsidies to help households pay their electricity bills.

“Even if September's data don't show real wage growth, the underlying trend of real wages turning positive is expected to continue,” Kiuchi said.

He cautioned that if the yen falls dramatically again, the outlook might change.

The yen almost hit ¥162 to the dollar in July. It is now trading in the high ¥140 range. Any weakening could contribute to inflation, which could lead to a decline in real wages.

Wage growth is one of the critical factors the Bank of Japan uses in deciding whether to increase rates. It has said that it will continue on its path toward tighter monetary policy if data is in line with its forecasts and if it confirms an economic recovery.

Wage growth could also affect the popularity of the administration of Prime Minister Shigeru Ishiba, who intends to call a snap election later this month. Ishiba has said his top economic priority is to once and for all end the risk of deflation, in part by making sure wages keep up with inflation.

According to separate data released by the internal affairs ministry on Tuesday, household spending dropped 1.9% in August from the same month a year earlier, although the figure was not as bad as the 2.6% average forecast in a Reuters poll.

While analysts are somewhat optimistic about the underlying wage-growth trend, they are more pessimistic about whether consumption will be strong.

“Even if real wages show sustainable year-on-year growth, it doesn’t necessarily mean that consumption will recover,” Kiuchi said, adding that wages are still low due to the years in which increases have been minimal.

Yutaro Suzuki, an economist at Daiwa Securities, noted in a report that there are some positive factors for consumption, such as the rebound of the yen following an increase in interest rates by the BOJ in July.

But with the pent-up demand from the pandemic weakening, it’s unlikely that consumption will significantly increase, Suzuki wrote.