Swiss Inflation Eases in August

Swiss consumer prices continued to fall in August on the year but at a slower pace than in the previous month, when prices had tumbled following aggressive summer sales.

But analysts said the inflation climate remained mild in Switzerland and this should not encourage the Swiss National Bank (SNB) to tighten rates in the immediate future. The central bank holds its quarterly rate-setting meeting on Sept 17.

Consumer prices dropped 0.8 percent from a year ago and rose 0.1 pct from July, the Federal Statistics Office said on Friday, against a Reuters forecast for a 0.9 percent decline year-on-year.

Consumer prices had fallen at their fastest rate in 50 years in July as retailers slashed prices for clothes and shoes in summer sales, underscoring deflation risks for the SNB.

Stripping out volatile price components like food, beverages, tobacco, seasonal products, energy and fuel, core inflation was up 0.7 percent, a notch lower than in July.

The SNB has taken drastic steps to fight deflation risks as the country faces the worst recession in over 30 years.

The SNB has cut its target for the 3-month franc LIBOR to 0.25 percent, offers money in daily repos at rates close to zero, and has intervened to keep the franc from rising.

Swiss Inflation Eases in August, Reuters
9/4/2009 9:35:49 AM