By Megumi Fujikawa

TOKYO--Japan's real wages fell for a ninth consecutive month in September, complicating the central bank's policymaking as it walks a tightrope between inflation and tariff headwinds.

Inflation-adjusted wages dropped 1.4% in September from a year earlier, government data showed Thursday. That compared with August's 1.7% fall and extended the run of declines seen since January.

Despite companies' efforts to hike workers' pay over the past years, inflation has still outpaced wage growth. In September, consumer prices excluding imputed rent rose 3.4% on the year.

BOJ Gov. Kazuo Ueda has said that he wants to see more data, including early signals for next year's shunto wage negotiations, before deciding on its next action. The annual talks set the course for pay increases across the country.

The BOJ kept its policy rate unchanged at 0.5% in October amid uncertainties over the economic impact of U.S. tariffs, but stuck to its stance of seeking further interest-rate hikes if the economy and prices develop in line with its projections.

Japan's largest union group recently said that it plans to seek a pay increase of at least 5% at the 2026 wage negotiations. Companies gave employees an average pay bump of 5.25% this year--the largest in 34 years.

Given that inflation in 2025 has been stronger than in the year before, Japanese firms will likely grant another round of big pay hikes at the upcoming shunto, said Capital Economics economist Abhijit Surya.

"Once that becomes clear over the course of the BOJ's information gathering exercise in the coming weeks, we suspect it will restart its hiking cycle at its January meeting," he said.

Some economists say it may be difficult for the BOJ to raise interest rates at its next meeting in December--the final window of opportunity it has for this year--as the formation of a new government could bring about policy shifts that may affect the central bank's own policymaking.

Write to Megumi Fujikawa at megumi.fujikawa@wsj.com

(END) Dow Jones Newswires

November 05, 2025 20:54 ET (01:54 GMT)

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