Japan's Ministry of Health, Labour and Welfare announced on Wednesday that real cash earnings in August rose by 1.5% year-on-year, marking the eighth consecutive month of increases and the longest streak in nearly a decade. However, a significant portion of this rise relied on government utility subsidies, which suppressed the year-on-year CPI increase to 1.9% in August, and a planned reduction in food sales tax (from 8% to 1%) effective April next year. Meanwhile, bankruptcy cases due to labor shortages reached a record high of 240 in the first half of fiscal year 2026. Overnight index swaps indicate a 76% probability of another interest rate hike by the Bank of Japan before the end of the year. The coexistence of rising wages, a wave of bankruptcies, and interest rate hike expectations is pushing the central bank into a dilemma.