Swiss consumer prices rose 2.9 percent from a year earlier after increasing the same amount in May, the Federal Statistics Office in Neuchatel said today. That's the highest rate since October 1993. Economists forecast an acceleration to 3.1 percent, according to the median of 20 estimates in a Bloomberg survey.
A surge in oil prices to more than $144 a barrel today is pushing up inflation around the world and draining consumers' purchasing power just as economic growth cools. The Swiss central bank left its target interest rate on hold last month, saying the acceleration in inflation is ``transitory.''
Core inflation, which excludes food and energy prices, increased 1.2 percent from a year earlier and slid 0.3 percent from May. Clothing and shoe prices fell 2.1 percent because of summer sales.
Overall, prices rose 0.2 percent from the previous month.
The franc fell to as low as 1.6132 against the euro from 1.6103 yesterday. Against the dollar, the Swiss currency declined to 1.0166 from 1.0140 the day before.
As record food and energy costs drive prices higher, central banks from Asia to North America have shifted their focus from combating the global credit squeeze to taming inflation. The ECB and Swedish central bank both lifted interest rates today to curb accelerating price increases.
The SNB said today inflation will remain above its 2 percent ceiling until the second quarter of 2009. On June 19, the SNB had said inflation would fall below 2 percent ``from the beginning of the year.''
Rising prices may prove tougher to tackle if workers start demanding more pay to compensate for higher living costs. Swiss trade unions may seek increases of around 5 percent this year to compensate for faster inflation, said Daniel Lampart, the chief economist of the unions' umbrella organization SGB.
Crude-oil prices have gained 49 percent this year, adding to pressure on companies to pass on higher costs to shore up profit. Muttenz-based Clariant AG and rival chemical supplier Ciba Holding AG plan further price increases to combat higher costs for oil-derived raw materials, the companies said May 28.
Inflation in Europe accelerated to 4 percent in June, the highest in more than 16 years. According to a harmonized European inflation index, Swiss prices rose 0.3 percent from the previous month and 2.8 percent from a year earlier.
With inflation woes weakening Europe's economic outlook, Swiss exporters may see falling orders from their biggest market. Sales abroad by Swiss companies declined 0.2 percent in May, falling for a second month as slowing global growth curbed orders.
The government estimates private consumption growth will slow to 1.6 percent next year from 1.9 percent. Switzerland's economic expansion slowed to 0.3 percent in the first quarter, the weakest pace in more than three years.