Following the changes in workers wages is an important factor to overall inflation. As salaries increase, consumers spend more, and thereby exert upward pressure on retail prices. Higher wages also improve consumer sentiment and bolster overall economic growth.
Wages fell a sharper than expected 2.7% on the year in February, following a 1.3% decline in January. That is an indication of the pressure Japanese households face, not only is unemployment increasing but firms are cutting back hours and pay for those that have jobs. Household spending was down 3.5% on the year in February while the unemployment rate increased to 4.4%.
