Japan’s Wage Slump Tests New Prime Minister’s Economic Strategy
Japan's economic woes deepen as real wages extend their decline for a ninth consecutive month. Despite nominal pay increases of 1.9%, inflation at 2.9% has eroded purchasing power, leaving households with 1.4% less than last year. The stagnation traces back to 2021, creating mounting pressure on Prime Minister Takaichi's administration.
The nation's first female leader is reviving Abenomics with a 13.9 trillion yen ($92.2 billion) stimulus package targeting energy subsidies and wage support for SMEs. This aggressive fiscal intervention comes as headline inflation exceeds the BOJ's target for 41 straight months, raising concerns about policy alignment. Marcel Thieliant of Capital Economics voices skepticism, suggesting the spending surge may exacerbate rather than alleviate inflationary pressures.
