Japan’s nominal wages rose 3% year-on-year in January 2026, accelerating from a 2.4% gain in December and surpassing market expectations of 2.5%. This was also the fastest pace of growth in six months. Base pay climbed 3%, the largest increase in more than 33 years, while a more stable measure that avoids sampling issues and excludes bonuses and overtime showed full-time workers’ wages rose 2.2%. Meanwhile, inflation-adjusted real wages, a key gauge of household purchasing power, increased for the first time in 13 months. Real wages grew 1.4% YoY in January after falling each month in 2025, marking the fastest increase since May 2021. The data supports the Bank of Japan’s case to continue normalizing monetary policy and provides the government with more flexibility to pursue its key policy objectives.