Japan’s inflation-adjusted real wages climbed 1.4 per cent in May from a year earlier, the fifth consecutive monthly increase and the longest positive streak since 2021, labour ministry data showed on Tuesday. The rise was powered by a 3.2 per cent jump in nominal average pay—the fourth straight month above 3 per cent, a pace unseen in more than three decades—and a consumer price index used for the wage calculation that rose a modest 1.7 per cent, held down by the abolition of a provisional gasoline tax surcharge and softer rice prices. Yet separate figures from the internal affairs ministry revealed that real household spending by two-or-more-person households fell 0.4 per cent, the sixth straight monthly decline. Spending on automobiles slumped 21.6 per cent after a prior-month surge linked to the end of an environmental tax, while outlays on package tours and utilities also dropped, offsetting gains in food and durable goods.

Viewed from Dhaka, the picture is far grimmer. Bangladesh’s national wage rate has failed to keep pace with inflation for 53 consecutive months, stretching back to January 2022, according to the Bangladesh Bureau of Statistics. In June, headline inflation stood at 9.16 per cent while the wage rate rose only 8.18 per cent, steadily eroding purchasing power in an economy where roughly 86 per cent of activity is informal. Khondaker Golam Moazzem, research director at the Centre for Policy Dialogue, noted that the prolonged high inflation has made living conditions unbearable for limited-income households, forcing cuts in spending on entertainment, tourism and other discretionary items, which in turn weighs on commerce.

The contrast illuminates the policy dilemmas on both sides. In Tokyo, the Bank of Japan has made sustained wage growth and a recovery in consumption preconditions for further normalisation of its ultra-loose monetary policy. Governor Kazuo Ueda reiterated in June, after raising the benchmark rate to 1 per cent, that the central bank would continue to hike if the economy, inflation and financial conditions evolve in line with its projections. The May data, however, show that even with solid nominal pay gains and contained inflation, households remain cautious, delaying the consumption-led virtuous circle the BOJ seeks. In Bangladesh, the interim government is preparing to implement a new pay scale for its 1.4 million civil servants from July, with the cabinet set to review a proposal within two weeks. The ninth pay commission recommended raising the minimum basic salary from 8,250 taka to 20,000 taka and the maximum from 78,000 taka to 160,000 taka, a move that would require an additional 1.06 trillion taka. While the pay rise will boost the incomes of public-sector workers, analysts in Dhaka warn it could stoke a fresh round of price increases, further squeezing the private-sector and informal workers whose wages have lagged inflation for years.

The next milestones are the cabinet decision in Dhaka, which will determine the phasing of the new pay structure, and the BOJ’s upcoming policy meeting, where board members will assess whether the wage-consumption nexus is strengthening sufficiently to justify another rate increase. In both capitals, the interplay between pay, prices and spending will shape the near-term economic path.