Swiss inflation nudges up in August amid higher energy prices

The useful part

As such, headline annual inflation is seen doubling in August compared to July. This is the more important metric, one that the SNB looks at more closely to decide on monetary policy setting. For now, the big picture outlook remains that Switzerland is still sitting very close to the bottom of the SNB's 0% to 2% definition of price stability.

How it works

• However, there was only a slight increase in core annual inflation.
• So, they are not in a hurry to move on policy in order to address the inflation situation.
• The key complication for the SNB at the moment is the franc currency itself.
• As a safe-haven currency, renewed geopolitical tensions can drive further appreciation in the franc.
• That means policymakers may remain more concerned about excessive franc strength and renewed disinflation than about an imminent inflation problem.

What to take from it

Swiss inflation is low, policy is already neutral at 0%, and so the bar for either another cut or a rate hike remains high.

Details worth keeping

Switzerland August CPI +0.4% vs 0.0% m/m expected (Prior -0.1%) Switzerland August CPI +0.8% vs +0.5% y/y expected (Prior +0.4%) Switzerland August core CPI +0.4% y/y (Prior +0.3%) The surge in petrol prices was the key factor driving up Swiss inflation in August, with that seen 25% higher compared to the same month a year ago. This article was written by Justin Low at investinglive.com.