STORY: The first clue came from Toyota, with word that its workers were set for their biggest pay hike in 25 years.

But now it seems staff at other Japanese firms could do just as well, or better.

On Friday (March 15), the country’s top union grouping said firms had agreed to average wage increases of 5.28%.

That’s the biggest number in 33 years.

It was also significantly more than analysts had expected.

While the news is welcome for workers, the effects could go a lot further.

The Bank of Japan has been waiting for signs of strong pay rises before acting on rates.

Investors bet the central bank will now soon bring to an end eight years of negative interest rates.

Some think a policy shift could even begin at next week’s policy meeting.

The government is counting on rising wages too.

Ministers hope deals at big firms will be copied by smaller companies - which account for about 70% of the country’s workforce.

That could help spur consumer spending, and help Japan to finally escape its long battle with deflation.

Companies there are raising wages amid a chronic labor shortage caused by a shrinking, aging population.

Union grouping Rengo said inflation and rising income inequality were other drivers.

Auto giant Toyota is widely seen as a bellwether for the pay talks.

But other firms to agree big hikes include Panasonic, Nissan and Nippon Steel.