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Swiss consumer prices buck positive trend in February
March 7, 2014 / 10:38 AM / 4 years ago

Swiss consumer prices buck positive trend in February

* Swiss CPI -0.1 pct y/y in Feb vs 0.1 pct in Jan

ZURICH, March 7 (Reuters) - Swiss consumer prices slipped back into negative territory in February, data showed on Friday, undershooting expectations and highlighting the Swiss National Bank’s concerns about persistent deflationary pressures.

The Swiss National Bank (SNB) capped the Swiss franc at 1.20 per euro in September 2011 to fend off deflation and recession after the safe-haven unit made large gains.

Prices fell 0.1 percent on the year in February, having risen for the first time in more than two years in November, the Federal Statistics Office said, and was steady at 0.1 percent for three consecutive months.

Economists’ forecasts in a Reuters poll were for prices to stay flat in February.

“The positive run of three successive positive 0.1 percent y/y reads is ended abruptly with a -0.1 percent result and a return to trend amid ongoing deflationary signs elsewhere in Europe, particularly the euro zone,” Informa Global Markets economist Tony Nyman said.

Prices rose 0.1 percent month-on-month in February, due to higher rent on flats and higher prices for air travel and package holidays, the statistics office said.

However, the price of hotel stays, heating oil and vegetables fell, it said.

The reading, along with weak fourth quarter growth, lends support to the SNB’s concerns over the continued fragility of Switzerland’s economic recovery, despite some evidence of an upturn going into 2014.

SNB Vice-Chairman Jean-Pierre Danthine told a Swiss newspaper last month the central bank would only consider scrapping its minimum exchange rate if inflation came in much higher and there was less upward pressure on the currency.

Other indicators paint a brighter picture for the Swiss economy in coming months.

Switzerland’s manufacturing sector accelerated in February, while the economy will likely build momentum in the next six months, a leading indicator has shown.

Industrial orders, an indication of future industrial production, are forecast to rise 2.0 percent on the year in the fourth quarter, recovering from a fall in the previous quarter, according to the latest Reuters poll of economists. (Reporting by Alice Baghdjian; Editing by Louise Ireland)

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