Swiss Inflation Was Probably Still at 3% in Nov

Swiss Inflation Was Probably Still at 3% in Nov

29 November 2022

Inflation in November probably stayed at 3% level, above the SNB’s target, which supports the case for another hike of interest rates.

Inflation at 3%

Inflation in Switzerland probably was at 3% level in November, which could mean it stayed above the Switzerland’s central bank’s target for a 10th month in a row. That would also hugely support the case for yet another hike of interest rates in December at the upcoming Swiss National Bank’s meeting. New data shows that prices for consumer goods, services were up 3% comparing to the previous year, as median forecast made by Bloomberg among economists confirm. Inflation of 3% is lower than a peak achieved in August, of 3.5%, that was the highest level since early 1990s, but still it is by 1% more than the SNB’s target of 2%. Back in September, the bank stated that readings above 3% could be observed trough this year and first quarter of 2023.

Another Peak in January?

Meanwhile, inflation may hit another peak of above 3% as soon as in January. Rising electricity costs will be passed on consumers and prices of goods, services will go even higher. Swiss utility companies can rise prices only at the begging of the year, so as of now costs remain the same in January, for 2023 they might jump as much as 27% on average, as expected by power regulator in Switzerland. If this will be the case, to the inflation reading 0.6% can be added, according to economists.

Another Hike

Another hike of interest rates is almost certain, as it was already hinted by central bank chief Thomas Jordan. However it is unclear how big the raise will be. Analysts at Bloomberg predict 75 basis points. The SNB is fighting off inflation with interest rates hike. It also stopped worrying by the good exchange rate of CHF, changing its monetary policy. Before it often intervened on the foreign exchange rate market to keep Swiss franc price controlled and not too high. Nowadays it doesn’t intervene that often as good exchange rate of the CHF is helping curing inflation. It is also worth to mention that even though inflation is well above target, comparing to other countries, it is very low. In eurozone itself inflation is three time as the one in Switzerland.