Swiss inflation flat in April

Consumer prices in Switzerland extended their longest slump in at least four decades in April, raising concerns that the debt crisis in the neighbouring Eurozone weighed on Swiss consumers. On a yearly basis prices decreased 0.6% in April after dropping 0.6% in March, the Federal Statistics Office said Wednesday. At the same time, they were flat in the month. Economists, however, expected an annual drop of 0.5% and a monthly increase of 0.1%. The SNB has imposed a Franc ceiling of 1.20 versus the Euro in September 2011 in order to fight the deflation. Even so, the latest data is showing that consumer prices have continued to fall and are now in their 19th consecutive month of annual declines, which is the longest stretch since 1971. 

"The Eurozone crisis is weighing on Switzerland, which is much intertwined with the euro zone economies," said Sarasin economist Jan Poser. "I wouldn't attribute the fall in exports too much to the strong Swiss franc, although it remains a headwind."

"The story in my view is that prices for imported goods are still falling, despite the Swiss National Bank's defense of the 1.20 floor," said David Marmet, economist at Zuercher Kantonalbank. "This helps the SNB maintain its monetary policy, and I see no signs of it changing. We believe the SNB will maintain the cap well into 2014."