TOKYO Japanese firms this year have raised or will raise monthly average regular wages by a record amount, an annual government survey showed on Tuesday.

Policymakers have said hiking wages is essential to ending deflation and to achieving and sustaining an inflation rate of 2% in a stable manner.

Monthly regular pay rose 3.2%, or 9,437 yen ($63.59), on average this year, both record highs since comparative figures began in 1999, showed a Ministry of Health, Labour and Welfare poll conducted July 20 through Aug. 10 with 1,901 respondents.

Last year, regular pay, which includes allowances but excludes overtime, holiday and special payments, rose 1.9%, or 5,534 yen.

The percentage of firms that raised or will raise average regular wages this year reached 89.1% versus 85.7% in last year's poll, the highest since 2019.

The impact of that percentage increase was reflected in the survey's record results, a ministry official said.

Wages had been stagnant for decades until last year, when rapidly rising raw material costs propelled inflation and added pressure on firms to compensate employees accordingly.

Major companies agreed to average pay hikes of 3.58% earlier this year, the highest increase in three decades, said trade union group Rengo.

Early indications from businesses, unions and economists are that the labour and cost pressures behind this year's hikes will persist into next year's spring wage talks.

($1 = 148.4100 yen)

(Reporting by Satoshi Sugiyama; Editing by Christopher Cushing)