The government said Thursday it expects wage growth in Japan to outpace the country’s consumer inflation in fiscal 2025, as in fiscal 2024.
In fiscal 2025, which starts next April, nominal wages are projected to increase 2.8% from the previous year, while the overall consumer price index, which includes fresh food prices, is forecast to rise 2.0%, an estimate presented by the government at the day’s meeting of its Council on Economic and Fiscal Policy showed.
In fiscal 2024, nominal wages and the overall CPI are estimated to go up 2.8% and 2.5%, respectively.
The pace of wage growth is expected to exceed that of inflation throughout fiscal 2024, and such a trend is projected to be firmly established in fiscal 2025, the Cabinet Office said.
In line with higher wages, personal consumption is forecast to gradually increase in real terms on the condition that the government continues to improve the environment for realizing wage hikes similar to those in fiscal 2024, the government agency said.
Private-sector members of the council called on the government to create an environment for wage hikes and support corporate investment for growth.
The private-sector panel members also urged the government to continue its efforts of bringing the combined primary budget balance of the central and local governments to a surplus, in light of the revival of “a world with interest rates” following the Bank of Japan’s policy rate hikes.
In addition to raising the minimum taxable annual income threshold from the current ¥1.03 million, the members urged the government to compile a comprehensive policy package that addresses “various barriers” causing some to reduce their working hours.
