Swiss annual inflation slowed to 0.4% in July, down from 0.5% in June, as petroleum prices fell even though heating oil costs rose. Core inflation held at 0.3%, keeping price growth well inside the Swiss National Bank's target band but close enough to zero that the threat of deflation remains in focus.
Switzerland's consumer prices rose 0.4% year-on-year in July, down a tenth of a point from June's 0.5% reading and in line with analysts' expectations, the Federal Statistical Office said Monday.
Month-on-month, consumer prices dipped 0.1%, again matching the consensus forecast of a Reuters poll of analysts. Core CPI, which strips out volatile food and energy prices, held at 0.3% year-on-year, unchanged from June.
Petroleum prices pull the headline rate lower
The cost of petroleum products in Switzerland fell 0.7% compared with June. Prices for clothing and footwear also fell on seasonal sales.
By contrast, heating oil costs jumped from the previous month. Year-on-year, petroleum product prices were still up 13.6%, a rise Reuters attributed to the conflict in the Middle East.
Deflation risk keeps SNB on alert
Core inflation staying closer to zero than 1% keeps deflation as the main risk facing the Swiss economy, Investinglive's commentary noted, since a stronger franc would add further disinflationary pressure. The Swiss National Bank left its benchmark rate unchanged in June, saying its medium-term inflation outlook had barely changed despite a recent uptick in price pressures.
The SNB targets annual inflation of between 0% and 2% and declined to comment on Monday's data. Investinglive's analysis suggested that if the franc's strength pushes prices back toward deflation, unconventional tools such as negative rates and quantitative easing could make a comeback in Switzerland before long.
Sources: Investinglive, Investing.com
Trading involves risk.
Risk Disclaimer
