- Ursina Kubli, foreign-exchange analyst at Bank J Safra Sarasin Ltd.
Consumer price inflation in Switzerland ticked up for the first time in six months in March, alleviating concerns over deflation, according to the Swiss Federal Statistics Office. Swiss consumer price inflation climbed by 0.3% from the previous month in March, compared to market expectations for a gain of 0.1%.
However, on an annualised basis, consumer inflation declined the most in almost three years in the reported month as the strong Franc lowered import costs. Cost of living in Switzerland fell 0.9% from a year earlier, the steepest decline since June 2012. While prices of domestic goods ticked up 0.3%, those of imported goods plummeted 4.3%. The Franc skyrocketed in January after the Swiss National Bank unexpectedly abandoned its cap of 1.20 per Euro, thereby lowering the cost of imports from the Euro zone, Switzerland's top trading partner. The Swiss Franc has appreciated about 15% versus the shared currency this year, as investors continue to be attracted by the traditional safe haven currency amid ongoing uncertainty around Greece. Last month, the SNB released forecasts suggesting the Swiss economy faces the biggest price drop in six decades this year. Even with a negative inflation rate, SNB President Thomas Jordan has said the central bank is unlikely to ease policy further. The SNB already has a deposit rate of minus 0.75%.
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