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FxWirePro: Daily Commodity Tracker - 21st March, 2022 
Bank of Japan Signals Readiness for Near-Term Rate Hike as Inflation Nears Target 
Consumer inflation in Japan is likely to have improved during the month of October, owing to a temporary surge in food prices.
Japan’s consumer price index, due to be released on Friday, is expected to rise to 0.1 percent y/y, notably up from -0.5 percent in the previous month. According to the available data in the Tokyo area, prices of fresh food including vegetables and fruits rose more than 10 percent last month, a result of the bad weather conditions, DBS reported.
Moreover, the nationwide core CPI excluding fresh food is expected to remain negative at -0.4 percent in October. The core CPI less both food and energy is expected to remain little changed as well, at 0.1-0.2 percent.
However, the drag from lower energy prices is likely to fade out in the months ahead, albeit at a slower pace. The recent depreciation of the yen should help to lift consumer prices. But it remains uncertain how long the rise in the USD/JPY, which has been chiefly driven by external factors, could continue.
Base wages have remained nearly stagnant in the past few years, despite the government’s push for pay hikes. PM Abe is reportedly to call on companies to raise wages again during next spring’s labor negotiations. But the outlook remains discouraging, the report added.
Moreover, owing to the weakness in actual inflation and fading impact of the BOJ’s monetary easing, inflation expectations have also come down in the corporate sector. As such, Japanese firms will likely continue to adopt a cautious approach on setting wages/output prices next year.
The USD/JPY currency pair strengthened to highest since March this year, remaining 0.3 percent firmer at 112.82, while at 7:00GMT, the FxWirePro's Hourly Yen Strength Index remained highky bearish at -167.62 (lower than the -100 benchmark for bearish trend). For more details, visit http://www.fxwirepro.com/currencyindex
Meanwhile, the benchmark Nikkei 225 traded up 1.09 percent at 18,359.50 and the broader Topix index rose 0.91 percent to 1,460.67 points.
