Swiss Core Inflation Turns Negative for Frst Time Since 1994

Swiss core inflation turned negative in October for the first time in at least 16 years as the strong franc dampened price pressures, indicating that interest rates could stay at ultra-low levels well into 2011.

The core inflation index, which excludes foodstuffs, drinks, tobacco, seasonal products and fuel, dipped 0.1 percent from a year earlier, the Federal Statistics Office said on November 4, showing the first fall since at least May 1994, the earliest set of data available on the Swiss National Bank's (SNB) website.

Overall, consumer prices rose 0.2 percent from a year ago, compared to forecasts for a 0.3 percent rise.

At its most recent policy review in September, the SNB signalled it was in no hurry to raise its target for the three-month Swiss franc LIBOR from 0.25 percent currently.

The SNB slashed its inflation forecast for 2011 to just 0.3 percent and the forecast for 2012 to a mere 1.2 percent and said it could not rule out overall prices falling again on a year-on-year basis at the beginning of next year.

Swiss Core Inflation Turns Negative for Frst Time Since 1994, Reuters
11/4/2010 12:32:23 PM