Inflation in Switzerland accelerated more than economists forecast, a result that may add to Swiss National Bank concerns about cost pressures getting out of control.
(Bloomberg) — Inflation in Switzerland accelerated more than economists forecast, a result that may add to Swiss National Bank concerns about cost pressures getting out of control.
Consumer prices rose 3.3% in January from a year earlier, the Federal Statistics Office said on Monday, as households endured an increase in their electricity bills.
That exceeds the previous reading and the 3.1% median forecast in a Bloomberg survey of economists. The SNB had anticipated the bigger number, with Vice President Martin Schlegel last month projecting that figure.
Core inflation, which strips out volatile elements including energy, accelerated to 2.2% from 2% in December, a second consecutive increase.
While Switzerland has sailed through the global cost-of-living shock with the lowest inflation rate in the OECD, policy makers are becoming more concerned that it might linger. In recent weeks, they expressed concern that companies are able to pass higher prices onto customers and wages may pick up.
Underlying inflationary dynamics are “stronger than what the SNB is prepared to tolerate,” President Thomas Jordan has said, signaling a further interest-rate hike in March. Meanwhile a survey indicated that mid-term inflation expectations of businesses are significantly above his target range of between 0 and 2%.
While inflation has come down from a 3.5% peak in August of last year, it has now exceeded the SNB’s ceiling for a year, averaging 2.8% in 2022. Policymakers have already raised rates by 175 basis points.
A pickup in inflation was widely expected because of how the power market for consumers is regulated in Switzerland, where utility providers are allowed to adjust prices only once a year.
State regulator ELCOM had predicted electricity would on average become 27% more expensive for households on higher global costs.
Based on a gauge harmonized with the European Union, Switzerland’s consumer-price growth stood at 3.2%, about a third of the pace in the surrounding euro area.
–With assistance from Kristian Siedenburg and Joel Rinneby.
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