- ZKB economist David Marmet
Consumer price pressure in Switzerland increased slightly in May, but still fell on a yearly basis, continuing to support the case for the Swiss National Bank to keep a cap on the Franc to ward off deflation. According to the Federal Statistics Office, the nation's consumer prices rose 0.1% month-on-month, in line with average analyst forecasts and up from a flat reading in the preceding month. On an annual basis, prices in May fell 0.5% compared with a 0.6% drop in the previous month, but less than the expected 0.6% fall. Seeking to avoid the deflation, the SNB imposed a cap on the Swiss Franc versus the Euro on September 2011 after investors looking for a safe haven from the Eurozone sovereign debt crisis had pushed the Swiss currency from one record high to another.
Even despite the fact the 17-nation crisis eased, and the Franc fell to the lowest level against the shared currency in two years last month, the Franc is still considered by the SNB as a highly valued currency. During the last policy meeting, the SNB also claimed it is not planning to change its policy on the Franc although it would not think out any steps to reach its goals. The central bank also expects the inflation rate at minus 0.2% in 2013 and sees a pickup in the next year, with consumer prices rising 0.2%.
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