In Japan, people earn more but still spend less

What happened

Household spending in Japan fell for the ninth month in a row, even though wages kept rising, according to Bloomberg. The report reads it as a sign that consumers are still cautious while persistent inflation squeezes their purchasing power.

Why it matters

A raise does not help much if prices climb just as fast or faster. What matters is what your money can actually buy, which is called purchasing power. It works the same way in Mexico or Canada: if your allowance, your first paycheck or a scholarship stays the same while prices go up, it covers less every month. That is why telling a nominal figure from a real one is one of the first things worth learning.