Presenting a tangled challenge for the Bank of Japan, real wages in the nation declined 1.2% on year in February, reported the Ministry of Health, Labor and Welfare (MHLW) on Monday.

In nominal terms, average monthly cash earnings per worker increased 3.1% on year, rising for the 38th-consecutive month, said officials.

But Japan's consumer price index rose even more quickly in February on year, turning real wages negative, reported officials.

Japan's central bankers and other government officials have reiterated support for monetary and other policies that generate enough steady demand for labor that real wages rise, thus allowing higher consumer spending, and boosting overall economic expansion.

In some regards, Bank of Japan policies are a success; domestic companies offered pay hikes averaging 5.42% in this year's annual labor talks, according to the Japanese Trade Union Confederation, reported The Mainichi newspaper.

However, the Bank of Japan also has a 2% annual target rate of inflation on the nation's consumer price index-core (CPI-core), a metric that strips out certain fresh food bills.

In the post-COVID 19 era, Japan's CPI-core inflation rate has tenaciously held above the Bank of Japan's 2% annual target, striking into the 3% in late 2024 and early 2025.

The pre-COVID-19 years were often called "lost decades," due to sluggish economic growth and scant inflation, with bouts of deflation.

Now, the Bank of Japan faces a challenge to bring inflation down, but to keep labor markets tight enough that real wages rise.

The Bank of Japan raised its key interest rate to 0.50% at its March policy session, up from 0.25%, in a bid to cool prices.

The Bank of Japan meets again to make policy at the end of April, although recent changes in global tariff picture will also press upon the central bankers.