2023-06-05 08:46:03
Consumer price inflation slowed to 2.2% in May year on year, following 2.6% in April, thanks to a lull on the oil products front. However, inflation is still above the objective sought by the Swiss National Bank (SNB).
The consumer price index (CPI) rose by 0.3% compared to the previous month to stand at 106.3 points, the Federal Statistical Office (FSO) said on Monday. This trend is due in particular to the rise in rents and prices for package holidays. Vegetables and fruits as well as many food products have also seen their prices increase.
On the other hand, the prices of air transport and supplementary accommodation have fallen, as have those of heating oil and diesel, which had soared following the invasion of Ukraine by Russia.
Economists interviewed by the AWP agency anticipated an increase in prices varying between 2% and 2.3% over one year.
Core inflation, which does not take into account changes in the prices of fresh produce and energy, highly volatile items, stood at 1.9% year-on-year.
The prices of indigenous products (+2.4% over one year), therefore manufactured locally, have accelerated significantly compared to those imported (+1.4%).
By analyzing the different headings, consumers had to pay more for food and non-alcoholic beverages (+5.3% over one year), housing and energy (+3.2%), clothes and footwear (+2.1%), as well as for leisure and culture (+3.9%). On the other hand, the prices of petroleum products contracted by 16.5% year on year.
SNB rate hike expected
‘We still anticipate a 25 basis point hike in the Swiss National Bank’s key interest rate this month. The monetary discipline of the SNB made it possible to obtain an imported inflation of 1.4%, certainly thanks to the fall in energy, but also because of the resilience of the Swiss franc,” writes in a commentary Arthur Jurus, the investment manager at Oddo BHF.
In its last monetary policy announcement in March, the Swiss issuing body raised its key rate by 50 basis points to bring it from 1.0% to 1.5%. The SNB had not ruled out raising it once more if necessary in order to fight inflation, which has been above its 2% target since February 2022.
The central bank had also raised inflation projections for the current year and next to 2.6% in 2023 and 2.0% in 2024 as in 2025.
Mr. Jurus believes that ‘the figure of 2.2% over one year confirms that a return to the objective of price stability in Switzerland by the end of the year is achievable. This would be an exception in the world, particularly with regard to the United States (4.9%) or the euro zone (6.1%) where the rise in prices is still very significant and penalizes economic activity’.
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