"As long as inflation is positive, the inflationary fears of the SNB are contained"
- Alessandro Bee, J. Safra Sarasin economist
Swiss consumer prices remained unchanged in June from the previous year, highlighting the necessity to keep the SNB's cap on the Swiss Franc. It has been three years since the central bank imposed a lid on the nation's currency at 1.20 per Euro in order to support exporters and ensure healthy price growth. Currently deflation threat still remains. According to the Federal Statistics Office, prices were flat on the year in June, falling 0.1% on a monthly basis. The figure was against analysts' expectations for a 0.2% rise. The main reason for the monthly decline was the beginning of sales in clothing. The price of imported goods fell by 1.0% compared with the previous year, whereas domestic prices climbed 0.4%, suggesting that weak growth in prices is not a sign of a economic slowdown in Switzerland. At the quarterly meeting last month, the SNB stayed pat on its policy of capping the Franc and said it was ready to embark on further measures if necessary following the ECB's decision to ease its policy. The SNB also revised its inflation outlook for 2014 to 0.1%, up from the previous 0.0%, but cut its inflation forecast for the next year and 2016 to 0.3% and 0.9%, respectively.
Separately, another report showed retail sales declined 0.6% in real terms in May from the previous year.
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