Core Viewpoint - Japan's nominal wages have increased at the fastest rate in four months, raising speculation about a potential interest rate hike by the Bank of Japan in the coming months [1] Wage Growth - In June, nominal wages rose by 2.5% year-on-year, up from a revised 1.4% in May, although it fell short of the expected 3.1% [1] - Basic wages increased by 2.1%, with full-time workers seeing a 2.3% rise [1] Real Wages and Inflation - Despite strong nominal wage growth, real wages fell by 1.3%, which was a larger decline than the anticipated 0.7% [1] - The main inflation indicator reached 3.3% in June, with over 1,000 price increases reported by food and beverage companies in August, reflecting a 53% year-on-year increase [1] Central Bank Policy - The Bank of Japan maintained its policy rate at 0.5% last week, with Governor Kazuo Ueda emphasizing the importance of ensuring a "positive mechanism" for wages and prices [1] - Over 40% of respondents predict a rate hike in October, with more than half expecting an increase by the end of the year [1] Economic Pressure - The decline in real wages may increase pressure on Prime Minister Kishida to take stronger actions to help households cope with rising living costs [1] - Upcoming GDP data, expected to show weak growth due to inflation suppressing consumption, will be a reference for future Bank of Japan decisions [1] Labor Market Dynamics - Policymakers anticipate continued upward pressure on wages driven by labor shortages [1] - The U.S.-Japan trade policy may pose challenges, as increased import tariffs from the U.S. could erode corporate profits and impact wage growth [1]