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    In September, Japan’s annual Corporate Service Price Index rose from 2.7% to 3%.

    by VT Markets
    /
    Oct 27, 2025
    The Japan Corporate Service Price Index (YoY) rose from 2.7% to 3% in September, indicating that service costs have increased over the year. ## The Rise of Inflationary Pressures The jump in the Corporate Service Price Index to 3% highlights ongoing inflation in Japan’s economy. This figure is not isolated; it aligns with a trend that has been growing for several months. The nationwide core Consumer Price Index (CPI) was recently reported at 3.1% for September 2025. This data suggests a higher likelihood that the Bank of Japan will take action to tighten monetary policy before the year ends. We see this as a clear opportunity to buy into the yen, especially against the dollar. Reflecting on the past, the Bank of Japan’s first historic rate hike in March 2024 only temporarily boosted the yen. However, current inflation numbers are significantly stronger. With USD/JPY hovering around the 161 level, options betting on a drop to 155 in the coming weeks look appealing. For Japanese stocks, we are more cautious about the Nikkei 225. The index has performed well this year, recently reaching 41,500. However, the possibility of higher borrowing costs makes these valuations seem inflated. We recommend considering put options on the Nikkei 225 to protect against a possible decline, as rising rates could impact corporate profits. ## The Future of Japanese Government Bonds This inflation data also strengthens our belief that yields on Japanese government bonds have room to increase. The 10-year JGB yield recently surpassed 1.20%, a level not seen in over ten years, and this report supports a continued upward movement. Traders might want to consider short positions in JGB futures since the Bank of Japan may have to allow yields to rise further to tackle inflation. Create your live VT Markets account and start trading now.

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