Real wages in Japan fell for a fourth consecutive month in November as inflation continued to eat away at nominal increases, adding yet another complication to the country's rate outlook.

As some food prices and utility rates increased, inflation-adjusted real wages dropped 0.3% from a year earlier in November, according to data released by the labor ministry Thursday.

Nominal wages in November rose by 3%, a 35th straight month of increases. Base salaries jumped by 2.7%, the most in 32 years.

“Real wages are expected to clearly increase in December due to robust winter bonuses, but they could fall again from January onward,” Yoshiki Shinke, senior executive economist at Dai-Ichi Life Research Institute, wrote in a report Thursday.

“Even though nominal wages will likely continue to increase, the real wage could still fall in some months in the first half of this year because of the upward pressure on inflation, mainly food prices.”

He added, “It will likely take some time for real wages to enter a solid positive trend.”

While wages have risen steadily in recent years, the growth has fallen short of inflation. Inflation-adjusted wages rose in June and July last year after 26 months of declines, but have fallen since then.

Households are struggling to make ends meet, squeezed by price increases partly fueled by a weak yen and higher import costs. The situation is becoming critical as Japan keeps rates steady and the U.S. has said that it will slow its lowering of rates, putting the Japanese currency under more pressure.

Business leaders, politicians, policymakers and consumers are all paying close attention to this year’s wage trend.

Bank of Japan Gov. Kazuo Ueda has said pay increases in the upcoming spring negotiations are a critical factor for the central bank as it contemplates rate increases. Although nearly half of economists surveyed expected the BOJ to raise rates last month, the bank did not do so.

“We need more information about future wage trends, including the momentum for the next spring wage negotiations,” Ueda said in a news conference after the December policy meeting.

Leaders of major business lobbying groups stressed that the wage increase momentum must keep going this year.

In a news conference Tuesday, Masakazu Tokura, the chairman of the Japan Business Federation — or Keidanren — said, “2023 marked the beginning, 2024 saw acceleration and 2025 must be the year we solidify the trend.”

Takeshi Niinami, who chairs the Japan Association of Corporate Executives, or Keizai Doyukai, said the average wage increase by large firms will likely reach 5% again this year.

“What’s really crucial is to realize solid wage increases among small and midsize companies,” Niinami said.

The Japanese Trade Union Confederation has set a target of a more than 6% wage increase for smaller enterprises, and over 5% for large firms.

The 6% target may be too high for many small businesses, as the latest survey by the Japan Chamber of Commerce and Industry, a lobby group for smaller enterprises, shows just about 11% of them are planning to raise wages by more than 5%.