"Even though the distorting effects from the rise in the Swiss franc are fading out, we're still waiting for positive inflation rates"
- VP Bank economist Bernd Hartmann
Consumer prices in Switzerland fell more than expected last month, due to the lower costs for medicine, package trips, oil, and clothing. According to the report by the Federal Statistical Office's, nation's inflation rate fell by 0.4% from a year ago, the same drop as recorded in November, and was down 0.2% from the preceding month. Analysts, however, expected flat consumer prices in the last month of 2012. Friday's data are adding to signs that the Swiss National Bank will continue maintaining a cap on the Swiss franc against the Euro. The SNB has been selling francs for other currencies, mostly euros, since September 2011, to avoid the risk of deflation and a recession, when investors rushed to buy Swiss francs as a safe haven from the Eurozone's debt crisis.
"Even though the distorting effects from the rise in the Swiss franc are fading out, we're still waiting for positive inflation rates. We are, however, expecting inflation rates to turn positive in coming months," VP Bank economist Bernd Hartmann said.
"Giving up the exchange rate floor is not on the agenda (of the SNB) so there is no inflation pressure from the exchange rates," VP Bank's Hartmann said.
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