Japanese workers’ real wages rose for an eighth straight month, marking the longest streak of gains in almost a decade, as Prime Minister Sanae Takaichi deploys inflation-relief measures to boost households’ spending power.

Real cash earnings — adjusted for inflation excluding rents — climbed 1.5% in August from a year earlier, the labor ministry reported Wednesday, matching economists’ forecast. The ministry said that the increase was underpinned by steady growth in base salaries, which rose 3.8%.

Nominal wages also increased 3.8%, staying above 3% for a seventh month, the longest such run since 1992. A more stable gauge that strips out bonuses, overtime and sampling distortions rose 2.8% for full-time workers.

Takaichi’s utility subsidies helped keep the pace of gains by the overall consumer price index at 1.9% in August. The premier touted her efforts during a policy speech Monday to mark the start of a new session of parliament, noting that price relief measures had helped give Japan the lowest inflation rate in the Group of Seven. That, in turn, is helping the nation’s real wages rise at the fastest pace among its peers.

The government is now aiming to give households further relief by cutting the sales tax on food to 1% from 8% for two years starting in April, a key issue to be debated in the extraordinary diet session now underway. How the plan takes shape could affect Takaichi’s strategy for managing fiscal policy and determine whether her public support remains firm. Read: Takaichi Faces Test of Economic Agenda as Japan Parliament Opens Wage gains have been supported by healthy corporate earnings.

Ordinary profits across all industries hit a record in the quarter through June, buoyed by artificial intelligence-related demand and a weaker yen, Finance Ministry data showed last month. Business sentiment has also held up, with the Bank of Japan’s latest Tankan survey showing confidence among large manufacturers at its highest in more than eight years.

Strong profits and improving business confidence provide a favorable backdrop as workers prepare to begin the next round of annual wage negotiations. Japan’s largest labor union federation typically announces its pay target for the coming fiscal year as early as this month. Workers represented by the group secured increases of more than 5% for a third straight year in this year’s round of talks.

Sustained wage growth has been a factor paving the way for the Bank of Japan’s interest-rate hikes. Last month, after hiking the benchmark rate for the second time in three months, the central bank signaled the need for further tightening by underscoring the risk of inflation overshooting its 2% target. Authorities cited increasingly proactive wage- and price-setting behavior among companies as one source of upward price pressure.

While most economists expect the BOJ to hold its policy settings steady when the next board meeting concludes on Oct. 30, as of Wednesday morning in Tokyo overnight index swaps showed markets were pricing in a 76% probability of another rate hike by the end of the year.

Japan’s demographic challenges have been a key factor driving wage momentum. Chronic labor shortages have forced companies to compete for talent by raising pay levels. Some companies unable to pass the higher input costs onto customers have struggled.

Bankruptcies caused by labor shortages rose to a record 240 in the first half of fiscal year 2026, according to a report Tokyo Shoko Research released Monday. More than half were attributed to rising personnel costs, underscoring mounting financial pressure on smaller businesses, the firm said.

It remains unclear whether higher wages will translate into stronger spending. Private consumption remains fragile, with household spending falling for eight straight months through July.