Switzerland: Switzerland records ninth consecutive month of deflation
July 6, 2012
In June, consumer prices fell 0.3% over the previous month, which marked the first monthly drop since January. The print was below the flat reading observed in May and was in line with market expectations. Lower prices for fuel as well as for clothing and footwear, due to the start of summer sales, were the main drivers behind the monthly decline. As a result of the monthly drop, consumer prices fell 1.1% over the same month last year, which followed on a 1.0% decline in May. The outturn represents the ninth consecutive month of annual deflation, which is well below the Swiss National Bank's 2.0% inflation target. Annual average variation in consumer prices fell from minus 0.4% in May to minus 0.5% in June. Going forward, inflation is likely to remain mired in negative territory, as a strong Swiss franc lowers the cost of imports. The Swiss National Bank predicts inflation to average minus 0.5% this year. For 2013, the Bank sees inflation rising to 0.3%.
Author: Ricardo Aceves, Senior Economist