Japan’s new prime minister faces pressure as wages fall for ninth straight month

Japan’s newly appointed Prime Minister Sanae Takaichi is dealing with a serious problem just weeks into her job as workers can’t buy as much with their paychecks as they used ￰0￱ numbers from Thursday show things getting ￰1￱ marked the ninth straight month of declining real ￰2￱ when you zoom out? Worker buying power hasn’t budged since 2021. That’s putting real strain on families. Here’s what makes it ￰3￱ are actually getting raises — nominal pay climbed 1.9% year over ￰4￱ inflation wiped out those gains and then ￰5￱ wages ended up down 1.4%.

Takaichi is Japan’s first woman prime minister. She’s pledged to revive “Abenomics,” the late Shinzo Abe’s signature economic ￰6￱ basic pieces: ultra-easy monetary policy, big fiscal stimulus, and structural reforms. She’s moving ￰7￱ reported by Cryptopolitan , the new prime minister is already planning a 13.9 trillion yen ($92.2 billion) spending package to help households cope with rising ￰8￱ says the package tops 10 trillion yen, with subsidies for electricity and gas bills, plus help for small and medium companies trying to boost ￰9￱ plans could backfire There’s a catch ￰10￱ spending could clash with Japan’s inflation ￰11￱ inflation has topped the Bank of Japan’s 2% target for 41 months ￰12￱ hit 2.9% in ￰13￱ spending that month?

Just 1.8%, missing the 2.5% economists ￰14￱ Thieliant at Capital Economics isn’t buying the stimulus approach. “Opinion surveys show inflation is the number one concern for Japanese ￰15￱ Takaichi responds with populist measures such as energy subsidies or cash transfers, that would only enhance those inflationary pressures,” he ￰16￱ doesn’t have tons of options ￰17￱ Feng from HSBC warned that an oversized stimulus package funded by government bonds could “potentially diminish Japan’s fiscal credibility.” The numbers back him up. Japan’s debt-to-GDP ratio hit almost 250% in 2023, per IMF data. That’s among the highest anywhere in the ￰18￱ Koll at Monex Group was blunt about it in October: “If inflation in Japan is still is not below 2% in six to nine months time, the popularity of this cabinet is going to plummet because for the Japanese people … the number one, number two, number three concern is inflation.” Currency weakness adds to pressure High inflation could force Takaichi to rethink her stance on expansionary monetary ￰19￱ rates low tends to weaken the yen, which drives up costs for imported goods.

“The latest real wage data reflects Japan’s persistent inflationary ￰20￱ the Bank of Japan does not proactively react in a timely fashion, it runs the risk of appearing to fall behind the curve,” Feng ￰21￱ BOJ held its benchmark rate at 0.5% last month . That’s six meetings in a row with no ￰22￱ Kazuo Ueda says the central bank isn’t “behind the curve” on inflation. Takaichi’s tone has softened from her harsh criticism of BOJ rate hikes last ￰23￱ told parliament earlier this month that Japan hasn’t achieved sustainable inflation, hinting the central bank should go slow on raising ￰24￱ BOJ has said it’ll increase rates once it sees a “virtuous cycle” of rising prices and wages together.

“Under the new political landscape, the bar is now higher for the Bank of Japan to tighten monetary policy,” Feng ￰25￱ doesn’t mean the BOJ won’t act. “The current process of policy normalization will gradually ￰26￱ our view, the question on future rate hikes is a matter of when, not if,” Feng ￰27￱ at Capital Economics thinks the BOJ will push its policy rate to 1.5% by ￰28￱ has lots of retirees drawing pensions and people on fixed ￰29￱ is “very painful” for them, Tomohiko Taniguchi at the Fujitsu Future Studies Center told CNBC’s “Squawk Box Asia” last ￰30￱ Bybit now and claim a $50 bonus in minutes