Inflation edges higher

Technical factors edge inflation higher Keystone Archive

Swiss consumer prices rose by one per cent in March compared to the previous year and were up 0.2 per cent over February, according to the latest data from the Federal Statistics Office.

The year-on-year inflation rate, which was released on Tuesday, compared to a rate of 0.8 per cent in February and a rate of 1.5 per cent in March of 2000, the office said.

UBS Warburg economist, Andreas Höfert, told swissinfo that the inflation data was in line with his expectations.

The main factors behind the rise were higher taxes on tobacco, and increased prices for bubbly wines and selected meats and vegetables.

Core inflation excluding food, beverages, tobacco, seasonal products and energy and fuels, was up 0.1 per cent from February and one per cent from March 2000, the office said.

Normally when prices are rising central banks increase interest rates to curtail spending. However, two weeks ago the Swiss National Bank (SNB) cut domestic rates by a quarter of a per cent.

Höfert told swissinfo that he felt the SNB’s decision to move domestic interest rates lower two weeks ago was “the right thing” to do. He said the latest increase in price pressure was due more to a range of technical factors than a genuine heating-up of the Swiss economy.

He added that he was confident that prices would remain stable. “On the back of oil prices, which have retreated, we will see lower rates of inflation until the end of the year. For the year as a whole inflation should amount to no more than 1.4 per cent.”

swissinfo with agencies