‘‘The flat year-on-year result is a semi-surprise, but on balance Switzerland remains in a deflationary spiral"
-Informa Global Markets analyst Tony Nyman
Swiss annual growth of consumer prices was flat in July compared to a previous year, ending a streak of year-on-year negative inflation, stretching back to September 2011, when the Swiss Franc was trading around record high and the SNB decided to impose a cap versus the single currency. Report from the Federal Statistical Office showed that the nation's Consumer Price Index showed no change last month, after falling 0.1% in June, outpacing analysts' expectations of a 0.1% drop. On a monthly basis, prices however, fell 0.4%, erasing previous month's 0.1% gain. Swiss statistical office also said that the price of imported goods tumbled 1.4%, while prices of domestic goods remained unchanged in July.
In a separate report, the State Secretariat for Economic Affairs said that confidence among consumers deteriorated slightly in the third quarter, as households are less optimistic about the economic outlook and employment. Two of its subindexes fell noticeably, whereas such components as financial security and savings showed practically no change. A bunch of recent economic releases is supporting SNB's statement they expect a significant slowdown in the second quarter. Therefore, the cap on the Franc is vital, as the economy is still struggling to gain momentum.
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