Prime Minister Shinzo Abe on Friday talked up measures to promote wage growth, as his Cabinet and the Bank of Japan continue to stoke inflation that’s eating steadily into consumers’ buying power.
“We will make efforts to help wages rise at a fast pace to catch up with inflation as soon as possible,” Abe told lawmakers at the Diet, which is conducting an extraordinary session.
The BOJ’s goal is to achieve 2 percent inflation by around next year. In August, however, the monthly income of salaried households fell 5.4 percent on average from the previous year, notching 11th consecutive months of decline.
Abe claimed that his three-pronged “Abenomics” policy mix — led by the BOJ’s drastic monetary easing and the usual massive fiscal spending — has prompted private-sector companies to increase wages.
Last year, his team decided to provide tax breaks to firms willing to pay higher wages. Recent economic data, however, suggest that wages are hardly going up sharply enough to keep pace with the upward trend in prices being driven by the central bank’s aggressive qualitative and quantitative easing, which have weakened the yen considerably in the past two years.
The core consumer price index rose for the 15th straight month in August, up 3.1 percent from a year earlier, if the impact of the 3-point consumption tax hike to 8 percent from April 1 is included. The tax hike is estimated to have pushed prices up by about 2 percentage points.
The core CPI — the government’s preferred measure of prices — excludes fresh food but not energy.