TOKYO (Reuters) – Bank of Japan Governor Haruhiko Kuroda will receive a meagre 0.4% pay rise in 2022 after two years of cuts, the central bank said on Friday, even as he has stressed the need for higher wages to sustainably meet the central bank’s inflation target.

The 0.4% pay rise for the current fiscal year ending in March 2023 will apply to BOJ executives, including Kuroda and his fellow board members. It will consist entirely of executive allowances with no increases to monthly salaries, the BOJ said in a statement announcing the annual pay revision.

The decision underscores the challenge of driving up wages in a country accustomed to decades of grinding deflation or low inflation, which makes it hard to justify raising pay.

But, more recently, rising raw material costs and surging import prices from the weak yen have pushed up inflation, hurting many households that have yet to see wages rise much.

Core consumer prices in Japan’s capital, a leading indicator of nationwide trends, rose 3.6% in November from a year earlier to mark the fastest pace in 40 years, data showed on Friday.

Kuroda has repeatedly called on companies to boost wages next year and beyond, preferably by around 3% annually, to compensate households for the rising cost of living and pave the way for Japan to sustainably achieve the central bank’s 2% inflation target.

After rising just 0.3% last year, private nominal wages have been creeping up this year and increased a revised 2.2% in September from a year earlier due partly to intensifying labour shortages, according to government data.

(Reporting by Leika Kihara; Editing by Ana Nicolaci da Costa)