Swiss inflation unexpectedly slows to weakest since mid-2021 – BNN Bloomberg

(Bloomberg) — Swiss inflation unexpectedly slowed, bolstering the case for further interest rate cuts by the Swiss National Bank and fueling concerns that price growth could exceed the central bank’s target.

Consumer prices rose 0.6 percent from a year ago in October, Switzerland’s statistics office said Friday. That’s weaker than a single economist in a Bloomberg survey had expected to hold at 0.8 percent.

The costs of hotels, holiday packages and petrol and diesel fell, while clothing prices rose, according to a statement. A reading of core inflation, which excludes fresh and seasonal produce as well as energy, also slowed.

Swiss inflation has not accelerated since April amid continued franc appreciation. By making imports cheaper, the currency’s exchange rate has a considerable impact on price pressures.

Also, domestically, costs will decrease. Next year, Switzerland expects electricity prices to fall and a key benchmark rate for rents to fall, causing housing costs to fall. Thus, economists warned that inflation could fall below 0%, the lower end of the NBS’s target range.

The central bank has cut borrowing costs in all three rate decisions this year and is expected to do so again in December. Earlier this week, Chairman Martin Schlegel reiterated earlier statements that further cuts may become necessary.

He also said that negative interest rates remain “in the toolbox” and cannot be ruled out. The SNB has one of the lowest rates in the world, so officials have limited wiggle room. Schlegel also kept the possibility of interventions to weaken the franc on the table.

Consumer price growth in the euro area around Switzerland is much faster. Data on Thursday showed inflation there rose 2 percent in October. Based on the European Union’s harmonized measure, the Swiss registered a 0.7% advance.

–With assistance from Simon Lee and Joel Rinneby.