As the world puts the worst of the disinflationary threat behind it, tepid wage growth is shaping up as a key restraint to a genuine reflationary era taking hold in some economies. Nowhere is this more so than Japan.

Unlike the U.S. and Germany, where higher prices are driving up salary expectations, there is little pressure for pay hikes in Japan. The risk is that nascent inflation — forecast to emerge this year on the back of resurgent oil prices and a weak yen — erodes households’ purchasing power and crimps consumer spending.

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