Rising energy costs prompt revision of inflation calculation

The government's method of calculating the inflation rate is to be changed, after predictions about consumer prices proved way off the mark.

Revisions to the way the Swiss consumer price index is calculated resulted in a headline inflation rate for November of just 1.9 per cent year-on-year, according to the Federal Statistics Office on Thursday.

Compared with October, consumer prices were up 0.5 per cent in November.

The year-on-year increase was less than the 2.5 to 3.0 per cent increase many economists had been expecting. However, those expectations were recorded before a revision of the weightings within the consumer price index for energy components.

The Federal Statistics Office said the revisions reflected a correction of weightings in the index for heating oil and electricity, adding that the CPI rise in November would have been 2.6 per cent excluding the revisions.

It added that it now saw average inflation for 2000 of 1.6 per cent and at around 2.0 per cent for 2001 if oil prices, which have risen sharply in the course of the year, remained relatively stable.

An economist, Marcus Allenspach, told swissinfo that the revisions would help to keep inflation down. “These latest figures are good news for the economy as this low figure gives less power to the trade unions for higher wage demands and therefore less fear of inflation next year.”

Allenspach also thought it fair that the Federal Statistics Office had changed the weighting of energy within the index. This he said hadn’t been done since 1998.

He explained that energy consumption is closely linked to price and consumer demand for petrol has diminished with higher prices, meaning a lower weighting in the index is required.

swissinfo